COMPANY PROFILE 1
Safe Harbor Notice Safe harbor notice: The statement included in that are not historical in nature are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. IGS caution readers that forward looking statements are subject to significant risks and certainties based and are based on IGS current expectations. Actual results may differ materially from those contained in such forward-looking statements for a variety of reasons including, among others, risks associated with cyclicality and market conditions. Expect as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. 2
AGENDA COMPANY OUTLINE GAME INDUSTRY INTRODUCTION BUSINESS OVERVIEW FINANCIAL RESULT 2008 HIGHLIGHT 3
COMPANY OUTLINE 4
COMPANY PROFLIE Paid-in Capital 547 Million NTD (17.7 million USD) Established 1989 / 11 / 10 Employee 478 total employees ( 280 R&D employees ) ADDRESS Business Fields 6F, NO.48,Wucyuan RD,Wugu Industrial Park, Taipei County Designing, Developing and Manufacturing Arcade Games Licensing and Cooperation of Intellectual property rights Developing and Publishing Online Games Official Websites www.igs.com.tw www.gametower.com.tw Reuters 3293 TWO ; Bloomberg 3293 TT 5
PRODUCT INTRODUCTION ONLINE ARCADE CASUAL GAME SIMULATOR CAR RACING SHOOTING MUSICAL KIDS GAME AMUSEMENT( VIDEO GAME) STAR 31 WE DANCE OTHERS MMORPG Knight of Valou S.V.G. Action Game Action Game Dragon World Casual EZ Touch AMUSEMENT WITH PRIZE MAHJONG POKER VIDEO SLOT FONG SHEN CHANG CHUN 6
BUSINESS MEDEL ARCADE ONLINE Content Provider Manufacturer IP Licensing In-House Design Licensed IGS IGS General Distributor Channel Partner Special Content Request Customize Game Operator Game Center End-User 7
VISION World No.1 Game Developer Innovative Entertainment Competitive 8
COMPETITIVE ADVANTAGE Quality & Cost Technique Capacity Experience& Know how Time to Market CRM 9
GAME INDUSTRY INTRODUCTION 10
GAME INDUSTRY FIELD Arcade Game Console Game The core of digital content industry Well developing and booming Online Game Mobile Game PC Game 11
GLOBAL GAME INDUSTRY MARKET SIZE 50,000 45,000 Unit: US Million 86,418 85,279 100,000 90,000 40,000 75,328 80,000 35,000 30,000 58,081 62,080 63,759 70,000 60,000 25,000 50,000 20,000 40,000 15,000 30,000 10,000 20,000 5,000 10,000 0 2003 2004 2005 2006 2007(F) 2008(F) Arcade Game Console Game Online Game PC Game Mobile Game Total Source: Korean Game Industry White Book 0 12
ARCADE GAME MARKET SIZE 20,000 Unit: US Million 35,837 36,898 40,000 18,000 32,526 33,911 32,652 36,000 16,000 29,460 32,000 14,000 28,000 12,000 24,000 10,000 20,000 8,000 16,000 6,000 12,000 4,000 8,000 2,000 4,000 0 2003 2004 2005 2006 2007(F)2008(F) US Europe A sia Total Source: Korean Game Industry White Book Asia exclude Japan market is going up more rapidly 0 13
CHINA ARCADE GAME MARKET SIZE Based on N0.458 announcement <Entertainment Place Management Regulation > issued by State Council of the People's Republic of China, government encourage game center to be larger scale and 9 provinces are appointed as the first priority to execute this regulati on from 2006. 2006 2007 2008 2009 2010 9 Provinces 13 Provinces 13-17 Provinces (estimated) 17-20 Provinces (estimated) 20+ Provinces (estimated) 14
ONLINE GAME MARKET SIZE CHINA MARKET SIZE 1,500 1,000 500 0 Unit: US Million Market Size Growth Rate(RHS) 2005 2006 2007 2008 2009 2010 Market Size 359 583 807 956 1,121 1,293 Growth Rate(RHS) 63% 38% 19% 17% 15% Source: IRESEARCH 70% 60% 50% 40% 30% 20% 10% 0% TAIWAN MARKET SIZE 400 300 200 100 0 Unit: US Million Casual game is penetrating the market 48% 70% 64% 60% 55% 52% 30% 36% 40% 45% 48% 52% 2005 2006 2007 2008 2009 2010 MMORPG 150 153 157 15530% 157 155 Casual 64 86 104 126 144 168 Casual MMORPG Source: IDC 15
BUSINESS OVERVIEW 16
WORLDWIDE BUSINESS SCOPE Arcade No.1 in China arcade games Top3 in Italy AWP 90% market share in touch panel game in great China region Online Game NO.1 Causal game portal " Game tower" in Taiwan NO.1 mahjong game site in Taiwan NO.2 Online Dancing site in Taiwan 17
REVENUE CONTRIBUTION PRODUCT REVENUE CONTRIBUTION 100% 80% 28.2% 32.0% 32.2% 100% ARCADE REGIONAL REVENUE CONTRIBUTION 80% Emerging Market, Emerging Market, 4.3% 5.0% Taiwan, 9.4% Taiwan, 5.0% Europe & US, 21.6% Europe & US, 30.0% 60% 60% 40% 20% 71.8% 68.0% 67.8% 40% 20% China 64.6% China 60.0% 0% 2005 2006 2007 0% 2006 2007 Arcade Online China Europe & US Taiwan Emerging Market ONLINE REVENUE 100% FROM TAIWAN China contribution is expected from 2008 18
FINANCIAL RESULT 19
REVENUE(2003-2007) 3,000 Unit: NTD Million 60% 2,500 50% 2,000 1,500 1,000 Sales Annual Growth 33% Sales Annual Growth 37% Sales Annual Growth 34% Sales Annual Growth 53% 40% 30% 20% 500 10% 0 2003 2004 2005 2006 2007 0% Sales Net Profit Sales Growth Rate(RHS) 20
REVENUE (2005Q1-2007Q3) 800 Unit: NTD Million 700 600 500 400 300 200 100 0 05Q1 05Q2 05Q3 05Q4 06Q1 06Q2 06Q3 06Q4 07Q1 07Q2 07Q3 Sales Gross Profit Opearting Profit Net Profit 21
OPERATION PERFORMANCE 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2003 2004 2005 2006 2007 Q1-Q3 60% 50% 40% 30% 20% 10% 0% ROE(RHS) 14.02% 27.44% 41.95% 41.60% 48.93% Gross margin 57.90% 60.60% 70.90% 75.40% 76.52% Operating margin 25.60% 29.80% 41.80% 48.00% 51.64% Net Profit margin 14.80% 25.10% 33.50% 36.90% 39.38% ROE(RHS) Gross margin Operating margin Net Profit margin 22
DIVIDEND POLICY Dividend Policy: High payout & around 85% cash dividend 15 10 10.67 8.5 12.2 10.0 5 0 2005 2006 EPS PAY OUT 23
2008 HIGHLIGHT Target on 30% consecutive Growth 24
2008 POTENTIAL MARKET CHINA MARKET The market booms rapidly due to the regulation opened up by the China Government. Develop various product line to cultivate the market. Strategic alliance with the local game maker. Cooperate with the Japan game makers to introduce popular game on IGS PGM2 platform. ITALY MARKET New AAMS licenses are expected to issue in 2008 APR New product lines are ready - new SVGA platform is well prepared for market - Double screen product line 25
2008 POTENTIAL MARKET US MARKET SVGA & XGA product is ready for market Capture the high resolution market with competitive price strategy LATIN AMERICA Co work with local distributor to penetrate game center SVGA & XGA products are ready for casino alike market CASINO MARKET Submit GLI certification in 2008Q2 26
2008 NEW PRODUCT Simulator ARCADE PGM (25-30) AWP... 16 ONLINE GAME Game Tower 2008 launch We Dancing in China Licensed game Chang Chun Online In-house RPG in late 2008 27
Thank You! Please visit our website www.igs.com.tw CONTACT US Josh Hsu Tel: +886-2-2299-5048 ext.1300 E-mail: joshhsu@igs.com.tw 6F,No.48, Wucyuan Rd., Wugu Industrial Park, Taipei 248,Taiwan (R.O.C.) 28