BUSINESS REPORT

BUSINESS REPORT TO SHAREHOLDERS January 1 to December 31, 2013 Stock Code: 3659 Message from the President Globalization+Creativity A New Chapter for

This is my first Business Report since I was appointed President and CEO of Nexon – I am honored to have the opportunity to lead this company, and create value for our shareholders. I would like to thank our shareholders for your continued strong support. I would also like to thank Seungwoo Choi for his extraordinary vision and his years of dedicated leadership, guiding our growth from a small, privately-held company into a publicly-traded, multinational industry leader. We are proud of our accomplishments during 2013. Our business demonstrated ongoing strength; we brought our Korea business back to growth through strong performance of new and existing titles; and we also made excellent progress on our long-term strategic initiatives, including a series of Message from the President investments in studios around the world led by world-class management teams. Looking forward, we will be focusing on three priorities to grow our business in 2014 and beyond. First is Products: to focus our resources to create the best online games in the world. Second is People: we will believe we are in a unique position to attract and retain the best people in the business. Third, we will leverage our unique capabilities in online games and our geographic footprint to expand our network of successful partnerships. 2014 will be a year of change for Nexon as the new leadership team refocuses the company on these three areas. We believe that these are the keys to unlocking substantial new growth for Owen Mahoney our company and our industry, and value for our shareholders. President and Chief Executive Officer

01 Performance Report We again achieved record levels for revenue and net income through business expansion in Chinese and Korean markets

2013 Annual Results 2014 Business Outlook

We continued to capitalize on our development and Our aim is to be the No. 1 Global Entertainment operating capability, and our strong overseas network Company as the industry continues to move toward to provide our players around the world with the online, synchronous game play with free-to-play content they desire. monetization. In , there was strong performance among Our priorities going forward are as follows: existing titles, and the successful launch of FIFA Online 3. ● Sharpened focus on developing high-quality products

In China, performance was steady thanks to the Performance Report ● Sharpened focus on excellence in live development contribution made by Dungeon & Fighter generating a ● Improve business in the West and Japan through significant cash flow. content and operational improvements Revenue was ¥155,300 million (an increase of 43.3% year-over-year), consolidated operating income ¥50,700 We will continue to seek opportunities for million (an increase of 7.3% year-over-year) and partnerships with world-class developers to further consolidated net income ¥30,100 million (an increase of expand our geographic footprint. 6.5% year-over-year).

Revenue by user location (Fiscal year 2013)

Other 4.3% North America 3.5% China 63,900 million yen South Korea 43,000 million yen

Japan China Japan 36,400 million yen 23.4% 41.1% North America 5,400 million yen

South Korea Other 6,600 million yen 27.7% Total Revenue155,300million yen 02 News & Topics We are following a flexible growth strategy in a rapidly-changing industry

The industry continues to undergo a platform transition development companies headed by industry-leading toward online, synchronous game play with free-to-play talent to secure AAA content in the U.S. and Europe. monetization, a business model that we pioneered. We will continue to seek opportunities for investment, We made progress toward our long-term strategic publishing agreements and other initiatives from a initiatives in 2013 by making strategic investments in long-term and flexible perspective. 2013 Initiatives January 18 September 10 Social gaming business alliance with DeNA Strategic investment in U.S. game development company Shiver Entertainment February 25 September 13 Strategic investment in Robotoki, a

News & Topics cutting-edge U.S. game development company Acquired Korean game development company THINGSOFT April 22 October 24 Voluntary adoption of International Financial Reporting Standards (IFRS) Started commercial service of Dota 2 in South Korea June 3 October 30 Received A- credit rating from Japan Credit Rating Agency, Ltd. Strategic investment in Korean mobile game developmer moonrabbit July 16 November 28 Strategic investment in U.S. social game development company SecretNewCo Started commercial service of in Korea July 30 Counter-Strike Online 2 Strategic investment in U.S. game development company Rumble Entertainment 03 2013 Business Strategy 2014 Priorities Build and grow the best online games in the world

NEXON was founded in 1994 on the principle of delighting our users with the best online games. Looking ahead, we will sharpen our focus on quality. Products People

We believe that only the highest-quality, most original To create radically innovative and entertaining games games will be truly successful. To this end, we will be requires us to attract and retain the best people in the narrowing Nexon's focus and resources to fewer better industry from around the world. We will further games. differentiate ourselves by offering developers the freedom to create the most exciting games, and the ability to reach our massive worldwide audience. Deliver the highest quality games Business Strategy Partners across all platforms We have a uniquely strong track record in our industry of successful partnerships with leaders around the world, and a reputation for integrity and performance as a partner. We will continue to leverage our track record PC and capabilities to enter into significant new partnerships in 2014. Main partners

China

High quality ● Holdings Limited Mobile F2P Tablet ● Post & Telecommunications Technology Co.,Ltd. Online United States ● Inc. ●Valve Corporation and Hong Kong

●Gamania Digital Entertainment Co.,Ltd. Other regions

●AsiaSoft Corporation Public Company Limited

04 05 Game Contents Sudden Attack MapleStory Our lineupofPConlinegamesincludesaround60titleswithserviceinover100countriesand regions. NEXON isaworldwideleaderinF2Ponlinegames,creatingrich,deeplyimmersivegames. Game Contents We of full lineupa fer of game titles coveringrich rangegenres, of a tournaments to decide the strongest team. to decide the strongest tournaments e-sports and events café net through world the around popularity longstanding achieved game This modes. of variety a with FPS team vs. isateam Attack Sudden established the business model in Japan. gamefree-to-play in Korea, MapleStory a as serviced First adventures. on going by advance players where MMORPG action 2D isaside-scrolling MapleStory Copyright © 2007GameHiCo.,Ltd.AllRightsReserved. Copyright ©2010NEXONCo.,Ltd.AllRightsReserved. Copyright©2003 Copyright©2005NEOPLEInc.AllRightsReserved. Copyright ©2003NEXONKoreaCorporationAllRightsReserved. PC OnlineGames Vindictus Dungeon&Fighter immersive experience. atruly for renderings lifelike and graphics Advanced technology provides stunning RPG. action online realistic groundbreaking isa Vindictus 4years, for In development their skillsdeveloping along way. the Arad, of land the save to dungeons through quests undertake Players classes. character of selection arich with RPG action side-scrolling isa2D Dungeon&Fighter oyih 01NXNKraCroainAlRgt eevd Copyright ©2011NEOPLE Inc.AllRightsReserved. Copyright ©2011NEXONKoreaCorporationAllRightsReserved. Cyphers Mabinogi opposing team's base. the destroy to battle team vs. team in a abilities supernatural with characters control players universe, inafuturistic Set Inc. NEOPLE by developed AoS isan Cyphers Erinn. of land mythical inthe quests on going to in addition sewing, and singing as such activities lifelike Celtic Characters can mythology. enjoy ancient on based RPG online isan Mabinogi NEXON KoreaCorporationAllRightsReserved. Game Contents 06 Eleven+ ☆ Three Kingdoms Guild Battle Fantasy Runners for Kakao a new is genre combining side-scrolling action with RPG and social elements. communication unique A feature allows players to borrow a character player. fellow a from Euro Soccer Club Team BEST*ELEVEN+ is a 400 players over featuring battlecard game from 17 European clubs. Players act as managers, collecting the best cards to become the top in the league. SKYLOCK is a RPG resulting from the collaboration of hit cartoon artist Daiki Miki and screenwriter Yusuke Watanabe. Players enjoy a rich story and battle monsters to stop Satanas. evil the of return the Three Kingdoms Guild Battle players use stratagems and secret techniques in real-time battles with opposing guilds. Beautiful artwork by famous manga artists adds to the game. the of popularity Fantasy Runners for Kakao for Runners Fantasy Euro Club Team Soccer Euro Club Team Best SKYLOCK

Mobile Games Mobile NEXON is continually expanding to include new genres and expanding to include new NEXON is continually our rich experience in developing platforms, leveraging our diverse games. Our M&A in 2012 expanded immersive online platform. entrance to the mobile lineup with our full-fledged Copyright © 2013 Nexon Korea Corp. & Moonrabbit Corp. All Rights Reserved. Copyright © Exys © gloops, Inc. Copyright © gloops, Inc. Copyright © gloops, Inc.

Copyright © 2012 Electronic Arts Inc. All Rights Reserved. registered trademarks, or applied trademarks of Valve Corporation. Valve, Counter-Strike and Counter-Strike Online are trademarks, Copyright © 2008 NEXON & Valve Corporation, All Rights Reserved.

through next-generation technologies. enhanced appeal and gaming experience franchise by EA SPORTS™. This game provides from the world-acclaimed FIFA games games FIFA world-acclaimed from the FIFA Online 3 is the next PC online soccer game

equipment and commando units. battle experience featuring missions, Valve Corporation. This game is a realistic partnership between NEXON Korea and Counter-Strike Online is a FPS developed in a

FIFA Online 3

Counter-Strike Online responding to the increasing diversity of player needs diversity of player increasing the to responding 07 Overseas Business We aglobal are entertainment company North America, South America, and Europe. America, South America, North including and regions than 100countries in Asia, more online around 60 deliver Company. games We currently Our aim No.1Global the is Entertainment tobecome Overseas Business EO uoeSār S.ā Europe NEXON Inc. America NEXON Corporation Korea NEXON http://www.nexoneu.com/ http://www.nexon.net/ http://www.nexon.com/ anOesa usdaisRevenue byRegion Main Subsidiaries Overseas LUXEMBOURG U.S.A KOREA .l.

Est. September 2005 September Est.

Est. November 2010

Est. DecemberEst. 1994 ■ ■ ■ ■ ■ Fiscal Year Other North America North Japan China South Korea 2009 515 139 171 123 aaeeAcutn tnad IFRS Japanese Accounting Standards 41 39 / 12 (Units: Onehundredmillionsofyen) business. our online grow games toour and users aggressively online fascinating more We will even todeliver continue 2010 697 215 246 121 57 55 / 12 2011 876 327 130 286 68 63 / 12 2012 1,083 483 287 192 54 67 / 22013 12 1,553 639 430 364 66 54 / 12 NEXON’S Ef forts 08 Global internships NEXON developer ● ● and more conference, Distribution of charcoal Concerts for children for Concerts ● ● briquettes to elderly persons living alone, and other activities NEXON Mini Library Creation Overseas Activities Culture Sharing Opening of play spaces to Establishment of NEXON We have established the NEXONHANDS brand at our at our brand have established the NEXONHANDS We to represent the group’s subsidiary NEXON Korea with community service participation. Together taking action in three categories. subsidiaries, we are ● ● Mini Libraries nurture digital sensibility Educational posterEducational ©C.L.M Activities in Japan

Support for the healthy development of children Support for Efforts to prevent online-game trouble for children for to prevent online-game trouble Efforts Cooperation in Internet safety education in Internet safety Cooperation Support for career education Support for We are supporting the healthy development of children development of children are supporting the healthy We initiatives such as the “NEXON and Chiba Lotte through Baseball Camp.” Marines Youth We take measures such as setting payment limits to such as setting payment limits measures take We in-game purchases. We distribute netiquette teaching materials and posters to distribute netiquette teaching We educators. Through our activities such as our summer work experience our activities such as Through children with opportunities to think we provide program, the future. for dreams about work and their At NEXON, we are actively involved in initiatives aimed NEXON, we are actively At development and the youth at supporting healthy and online gaming problems. prevention of Internet our ties with the community and region and community the with ties our Activities aimed at creating a social environment through through environment a social creating at aimed Activities NEXON’S Ef forts Ef NEXON’S NEXON and Chiba Lotte Marines Youth Baseball Camp Summer workSummer experience program ■ ■ ■ ■ Financial Data

■ Consolidated Statement of ■ Consolidated statements of Financial Condition (Units: millions of yen) income (Units: millions of yen)

Previous f iscal year Current f iscal year Previous fiscal year Current fiscal year Account Items As of As of Account Items From January 1, 2012 From January 1, 2013 December 31, 2012 December 31, 2013 to December 31, 2012 to December 31, 2013 Assets Revenue 108,393 155,338 Cost of sales (18,602) (34,150) Current assets 155,164 217,799 Gross profit 89,791 121,188 Non-current assets 165,024 201,052 Selling, general and administrative expenses (39,073) (59,575)

Total assets 320,188 418,851 Other revenue 1,344 1,637 Other expenses (4,795) (12,545) Liabilities Operating income 47,267 50,705 Current liabilities 44,320 50,453 Financial revenue 2,234 3,237 Financial expenses (4,406) (5,1 99) Non-current liabilities 53,623 55,339 Investment loss on equity method affiliates (1,771) (95) Total liabilities 97,943 105,792 Pretax net income 43,324 48,648

Financial Data Capital Income tax expenses (15,165) (18,343) Net income 28,159 30,305 Capital stock 51,342 51,952

Capital surplus 50,188 50,688 ■ Consolidated statements of cash flows (Units: millions of yen) Treasury stock - (0) Previous fiscal year Current fiscal year Account Items From January 1, 2012 From January 1, 2013 Other components of capital 11,905 74,468 to December 31, 2012 to December 31, 2013

Retained earnings 105,293 131,374 Operating activities 42,451 60,208 Investing activities (112,155) (6,345) Total capital attributable to 218,728 308,482 Financing activities 29,764 (13,033) owners of parent company Net change in cash and cash equivalents (39,940) 40,830 Non-controlling interests 3,5 1 7 4,57 7 Cash and cash equivalents at beginning of period 117,599 84,736 Impact of exchange rate changes Total capital 222,245 313,059 7,077 13,277 on cash and cash equivalents Total liabilities and capital 320,188 418,851 Cash and cash equivalents at end of period 84,736 138,843

Note: With January 1, 2012 as the date of conversion to International Financial Reporting Standards (IFRS), from the current fiscal year our company is releasing consolidated 09 financial statements based on IFRS. The data presented for the previous fiscal year is also based on IFRS. Corporate Overview & Share Information 10 (%) Ratio 1.40% 1.54% 1.04% 1.59% 2.55% 2.40% 4.54% 16.52% 45.21 % 258,400(0.05%) 6,992 4,589 4,749 6,774 6,158 2013) of Dec. 31, (as 10,557 11,182 19,944 3,106,575(0.70%) 72,593 6,596,508(1.50%) 198,631 28,652,500(6.52%) Securities companies 400,729,834(91.2 1%) Individuals and other Financial institutions in Japan Corporations Foreign corporations, etc Foreign corporations, Number of Shares ( Thousand ( Shares) ■ ■ ■ ■ ■ (Top 10 as of Dec. 31, 2013) 31, 10 as of Dec. (Top Name of Shareholders Major ShareholdersMajor Shareholder Breakdown ■ ■ Japan Trustee Services Bank, Ltd. ServicesLtd. Bank, Japan Trustee Account) (Trust The Master Trust Bank of Japan, Ltd. Account) (Trust NXC Corporation Min Seo NXMH B.V.B.A. NORTHERN TRUST(AVFC) CO. SUB A/C 5220 STATE STREET BANK AND STATE COMPANY TRUST CBNY-ORBIS SICAV CBHK-KOREA SECURITIES CBHK-KOREA DEPOSITORY-SAMSUNG CBNY-ORBIS FUNDS 1.08% ,900 (as of Dec. 31, 2013) of Dec. 31, (as illion (as of Mar.25, 2014) of Mar.25, (as ber 18, 2002 (as of Dec. 31, 2013) 31, of Dec. (as PC online game development and servicesPC online game development and servicesMobile game development • •Game publishing •Portal site planning and management 266 104-0033 Tel.03-3523-7911

Corporate Prof ile Prof Corporate Board of Directors Corporate Share Information

■

President and Chief Executive Officer Executive Chief and President Owen Mahoney DirectorDirectorExternal DirectorExternal Director Statutory AuditorFull-time Statutory AuditorStatutory Auditor Tanaka Toshishige Satoshi Honda Park Jiwon Kuniya Shiro Jungju Kim Iwao Ohtomo Mori Ryoji Corporate Overview & Share Information & Share Overview Corporate Average ageAverage Business 32.4 • Paid-in Capital ¥51,868 m Location Chuo-ku, Shinkawa, 2-3-1, Number of employees Corporate Name Corporate Ltd. Co., NEXON Founded Decem ■ Total number of authorized sharesTotal Number of shares issued 1,400,000,000 439,343 ■ Number of shareholders 10,755 IR Information

Fiscal year From January 1 to December 31 Annual general meeting of shareholders March Record date December 31 Dividend record dates June 30 and December 31 The number of shares per unit 100 shares Administrator of shareholder registry Sumitomo Mitsui Trust Bank, Limited 1-4-1, Marunouchi, Chiyoda-ku, Tokyo Contact Sumitomo Mitsui Trust Bank, Limited Stock Transfer Agency Planning Department 2-8-4, Izumi, Suginami-ku, Tokyo 168-0063 0120-782-031 URL http://www.smtb.jp/personal/agency/index.html Method for public notices Electronic public notices are to be used. However, in the event that an accident or other unavoidable circumstances make it impossible to use an electronic public notice, the notices will be published in Nihon Keizai Shimbun. Public notices URL http://ir.nexon.co.jp/ir/kokoku.html

NEXON Co., Ltd. 2-3-1, Shinkawa, Chuo-ku, Tokyo 104-0033 www.nexon.co.jp