Securities code: 3659 March 11, 2013 To Shareholders with Voting Rights 2-3-1 Shinkawa, Chuo-ku, Tokyo NEXON Co., Ltd. Representative Director/President Seungwoo Choi Notice of the 11th Ordinary General Meeting of Shareholders Dear Shareholders: You are cordially invited to attend the 11th Ordinary General Meeting of Shareholders. The meeting details and agenda are as outlined below. If you are unable to attend the meeting, you may exercise your voting rights in writing. Please review the General Shareholders Meeting agenda described below and return the Voting Rights Exercise Form with your vote by 7pm on Monday, March 25, 2013. Notice 1. Date &Time: 10:00 a.m., Tuesday, March 26, 2013 2. Location: Tokyo Sankei Building At Otemachi Sankei Plaza on 4th Floor 1-7-2, Otemachi, Chiyoda-ku, Tokyo (Please be aware that this is a different location from the last year and refer to the location map on the last page of this document) 3. Agenda: Matters to be reported: 1) Business Report and Consolidated Financial Statements for the 11th fiscal year (from January 1, 2012 to December 31, 2012), and audit results on the Consolidated financial statements by the Independent Auditors and the Board of Statutory Auditors. 2) Non-consolidated Financial Statements for the 11th fiscal year (from January 1, 2012 to December 31, 2012). Proposals to be voted on: Proposal No. 1: Selection and appointment of six (6) directors Proposal No. 2: Issuance of subscription rights to shares as stock options to the Company’s directors and employees Proposal No. 3: Amount of directors’ remuneration in the form of equity-based compensation stock options and the decision on the contents ········································································································································· If attending the meeting in person, please submit the enclosed Voting Rights Exercise Form to the receptionist. Shareholders may exercise voting rights by proxy by assigning his or her voting rights to another shareholders with voting rights designated to act as his or her representative, provided that the document certifying his or her power of representation is submitted to the Convener. The notes to consolidated financial statements and non-consolidated financial statements are not included in the notice of the 11th Ordinary General Meeting of Shareholders as the Company discloses them on the website (http://ir.nexon.co.jp/stock/meeting.html) in accordance with relevant laws and regulations and provisions of Article 16 of the Company’s Articles of Incorporation. Should there be any amendments or changes to the reference materials for the General Meeting of Shareholders, Business Report, Financial Statements and Consolidated Financial Statements, the Company shall notify its shareholders via the Company’s website (http://ir.nexon.co.jp/stock/meeting.html). － 1 － (Reference Materials） Business Report (From January 1, 2012 to December 31, 2012) 1. Current Status of the Corporate Group (1) Business summary for the current fiscal year c Outline and results of business operations During the current consolidated fiscal year, the world economy witnessed a gradual recovery trend which was impeded by the impact of Europe’s fiscal and financial problems as well as the slowdown of exports and domestic demand in emerging markets. In Asia, China continued to grow steadily through exports and the increase in private consumption despite speculation about an economic slowdown. The Japanese economy has been slowly recovering despite the slowdown of exports as private spending – sluggish since the East Japan Earthquake – has started to pick up. In the United States, housing construction has remained at low level but the economy has slowly begun to recover, supported by private consumption. The Group is engaged in PC online game business and mobile game business, and has been striving to satisfy users by developing high quality games, acquiring excellent contents, and publishing new game titles as well as updating existing game titles. As a result of our efforts, we recorded Net sales of ¥108,448 million (an increase of 23.8% year-on-year); Operating income of ¥47, 874 million (an increase of 25.2% year-on-year); Ordinary income of ¥44,541 million (an increase of 20.7% year-on-year); and, Net income of ¥25,401 million yen (a decrease of 1.4% year-on-year) for the consolidated fiscal year ended December 31, 2012. Performance results by reportable segments presented as Net sales to third party customers are as follows: i) Japan In Japan, net sales from existing game titles of PC online games decreased except for certain titles. However, sales from inBlue.inc, acquired in June 2012, and gloops, Inc., acquired in October 2012, contributed to Net sales of ¥19,189 million and Segment income of ¥1,707 million. ii) Korea In Korea, significant increases in Royalty revenue from Chinese publishers of “Dungeon and Fighter” and successful updates of existing game titles such as “Sudden Attack” contributed to Net sales of ¥78,482 million and Segment income of ¥43,940 million. iii) China In China, Net sales and Segment income were ¥3,730 million and ¥2,405 million, respectively, due to the increase in Consulting revenue resulting from strong PC online game market in China. iv) North America North America segment recorded Net sales and Segment loss of ¥5,056 million and ¥562 million, respectively, due to decreased sales from existing game titles. v) Other In other segments, Net sales and Segment income increased from the previous year to ¥1,989 million and ¥430 million, respectively. Net sales by user location was ¥48,390 million (an increase of 47.6% year-on-year) in China, ¥28,744 million (an increase of 0.5% year-on-year) in Korea, ¥19,192 million (an increase of 47.5% year-on-year) in Japan, ¥5,371 million (a decrease of 15.2% year-on-year) in North America, and ¥6,749 million (a decrease of 1.6% year-on-year) in Other. In Japan, sales from mobile game developers acquired during the year including inBlue.inc and gloops, Inc. made a large contribution and increased the Japan’s sales by user location, resulting in the rise of Japan’s percentage in the Group’s sales by user location. Sales ratio by user location for the second and fourth quarter of the current consolidated fiscal year which tend to show similar seasonal characteristic was as follows: － 2 － Second quarter of the Fourth quarter of the current consolidated current consolidated fiscal Region fiscal year year Amount Ratio Amount Ratio (¥ million) (%) (¥ million) (%) China 10,737 46.9 11,074 35.8 Korea 6,251 27.3 7,057 22.8 Japan 2,826 12.4 10,037 32.4 North America 1,515 6.6 1,117 3.6 Other 1,545 6.8 1,651 5.4 Total 22,876 100.0 30,937 100.0 d Capital expenditure Total capital expenditure of the Group during the current consolidated fiscal year amounted to ¥5,007 million. The major components include building construction cost of ¥1,328 million (Pangyo district) by NEXON Korea Corporation, a subsidiary, and PC online game and mobile game equipment (e.g. server equipment) of ¥1,785 million, and software for internal use (game related) of ¥854 million. A Korean subsidiary NEXON Korea Corporation previously purchased land for a company building in Yeoksam-dong, Kangnam-gu, Seoul in order to integrate dispersed organizations and establish comfortable working environment. However, the Kangnam office development project was cancelled and land was sold (carrying value: ¥10,705 million) due to the excessive construction period and investment amounts and based on the decision that it is appropriate to secure liquidity by reducing the fixed assets and focus the company resources on the main business for the purpose of improving the corporate value, considering the recent change in economic conditions and increased competition in the game industry. e Financing The Company borrowed ¥49,672 million of long-term loans payable from Sumitomo Mitsui Banking Corporation to fund new investments. f Business transfers, absorption-type splits, or incorporation-type splits Not applicable. g Businesses transferred from other companies Not applicable. h Rights and obligations related to other companies assumed as a result of absorption-type mergers or splits NEXON Korea Corporation and NEXON Mobile Corporation, consolidated subsidiaries of the Company, executed an absorption-type merger with NEXON Korea Corporation as a surviving company effective as of May 1, 2012. i Acquisition or disposition of shares, other equity interests or subscription rights to shares of other companies The Company acquired all shares of inBlue.inc on June 29, 2012 and included the company as a subsidiary. The Company acquired all shares of gloops, Inc. on October 1, 2012 and included the company as a subsidiary. － 3 － (2) Assets and Profit/Loss for the most recent three fiscal years 11th Fiscal Year 10th Fiscal 8th Fiscal Year 9th Fiscal Year (Current Year (Ended (Ended consolidated Accounts (Ended December 31, December 31, fiscal year ) December 31, 2009) 2010) (Ended 2011) December 31, 2012) Net sales (Millions of yen) 51,572 69,781 87,613 108,448 Ordinary income (Millions of 22,351 28,479 36,905 44,541 yen) Net income (Millions of yen) 17,659 21,638 25,755 25,401 Net income per share (Yen) 5,004.15 6,131.79 71.65 58.71 Total assets (Millions of yen) 94,530 123,717 235,765 313,928 Net assets (Millions of yen) 45,895 66,904 177,886 214,925 Net assets per share (Yen) 12,937.33 17,714.50 408.28 483.45 (Notes)1. As of July 21, 2011 during the 10th fiscal year, the Company executed a share split at the ratio of 100-for-1 for common stock.