19 September 2023
The Management Board of Ten Square Games S.A., based in Wrocław, Poland (the “Company”) hereby provides the content of the answers provided to the questions posed on September 18, 2023 by a shareholder of the Company under Article 428 § 6 of the Commercial Companies Code:
1) Does the new composition of the Management Board intend to take or is it taking measures to restore the sale of “Fishing Clash” in China, if so, which ones?
2) If the answer is yes to the above question, when does the Management Board assume or expect that there could be a restoration of sales of “Fishing Clash” in China?
Response of Ten Square Games S.A.:
The Management Board of Ten Square Games is conducting a very preliminary investigation as to whether re-entering the Chinese market is currently profitable for Ten Square Games S.A. Such a move would require partnering with an entity that can operate in the Chinese market and reacquiring a license to distribute the Company’s games in the Chinese market on its behalf. Ten Square Games does not currently have such an agreement (the previous one has expired), and talks with none of the entities are at an advanced stage. This is not a priority project for the Company at the moment, and there is no specific timetable for this project.
The Company does not have estimates of potential revenues from distribution of its games on the Chinese market. It is worth remembering that during the distribution of Fishing Clash in the Chinese market by NetEase subsidiary Ten Square Games achieved the highest revenues from it in 2022. They amounted to PLN 3.9 million and their scale was not significant from the Company’s financial perspective. The company reported this in a statement published on March 22, 2023 on its corporate website: https://tensquaregames.com/2023/03/22/termination-of-the-contract-for-the-distribution-of-fishing-clash-in-china/
and in the management report on its activities in 2022: https://tensquaregames.com/wp-content/uploads/2023/03/TSG_Raport_Roczny_2022_SDZ_ENG_final.pdf
Distribution of games in the Chinese market is challenging due to the costly and lengthy licensing process and the Company’s lack of influence over decisions regarding the marketing budget and how to promote the game in the Chinese market. These decisions are made by the entity that receives the game distribution licenses from the Chinese government.