Xinhua Finance reports strong results for Q1 and revises the full year forecasts upward

Xinhua Finance reports strong results for Q1 and revises the full year forecasts upward

May 15, 2007

    SHANGHAI, China, May 15 /Xinhua-PRNewswire/ -- Xinhua
Finance (TSE Mothers: 9399, OTC ADR: XHFNY), China's
premier financial information and media provider, today
reported total revenue for the three months ended March 31,
2007, under International Financial Reporting Standards
("IFRS"), of US$46.6 million, a 25% increase over
the first quarter of 2006. Net income was US$94.5 million
for the first quarter of 2007, compared to US$3.6 million
for the first quarter 2006. Fully diluted
earnings-per-share (EPS) reached US$95.68, up from US$4.33
in 2006.

    (Logo: http://www.xprn.com.cn/xprn/sa/200611140926.gif
)

    Proforma EBITDA, adjusted to exclude non-cash ESOP
expenses and one-time items, was US$10.8 million, an
increase of 64% over US$6.6 million in the same period last
year. Proforma Net Income was US$4.8 million, adjusted to
exclude a one-time gain of $97.5 million from the initial
public offering of its consolidated subsidiary, Xinhua
Finance Media (NASDAQ: XFML), on the NASDAQ Global Market
in March 2007 and other non-cash expenses. Xinhua Finance
provides proforma results to help investors better
understand the Company's underlying operating and financial
trends.

    Based on the Company's strong performance in the first
quarter, the IPO of Xinhua Finance Media (XFMedia), and the
improved business prospects across services lines,
management is revising its full year revenue and EBITDA
forecasts upward. 

    Fredy Bush, CEO of Xinhua Finance, commented, "We
continued to invest in our business during the quarter as a
long term growth strategy of the Company.  While the content
business of the four core services lines continued to
achieve their expected milestones, the IPO of XFMedia, our
media distribution subsidiary, has unlocked value for the
Company and significantly enhanced our brand awareness and
reputation. XFMedia makes a positive contribution to the
Company, adding significant value for our shareholders, and
its listing provides additional resources to support the
Company's future acquisitions and business
development." 

    The market cap of XFMedia was US$984 million at its IPO
of which Xinhua Finance's shareholding was valued at US$325
million.  

    Ms. Bush added, "The Company is further enhanced
by the progress of our media distribution business, which
enables us to gain greater value from our unique and
proprietary content offerings that we create within our
core service lines. Through distribution across various
China media channels, we are able to leverage our content,
brand name, and client base to capture additional revenue
streams, such as advertising income."

    CFO Gordon Lau added, "We continue to capitalize
on the synergies and cross-selling opportunities across our
business lines.  At the same time we continue to explore new
opportunities to add value to the Company and our footprint
in the Chinese market which is the strongest it has ever
been. With our upwardly revised forecast for full year
2007, we continue to maintain a strict focus on cost
control, and are confident in our ability to continue our
trend of profitable growth."


    First Quarter 2007(1) vs. First Quarter 2006(1) - unit:
million USD 
                       Q1 2007  Q1 2006   Variance
    Revenue              46.6    37.4       25%
    Proforma EBITDA(2)   10.8     6.6       64%
    EBITDA(3)             3.0     5.8      -47%
    Proforma Net 
     Income(4)            4.8     4.1       16%
    Net Income           94.5     3.6    2,614%


    Full Year 2007 previous forecast(5) vs. reforecast -
unit: million USD 
                    Previous forecast  Reforecast 
Variance
    Revenue               228.7           260.0      14%
    Proforma EBITDA(2)     45.7            60.5      33%
    EBITDA                 37.4            46.6      24%
    Net Income             53.3            57.3       8%


    First Quarter 2007 results (Japan GAAP(6)) - unit:
million USD

                         Q1 2007   Q1 2006   % change
    Revenue               46.6      37.4        25%
    Proforma EBITDA(2)    10.8       6.7        61%
    EBITDA (3)             2.2       5.6       -61%
    Proforma Net 
     Income(4)             0.3       0.2        63%
    Net Income            82.4       0.9     9,478%


    (1) For three months period-to-date ended March 31, 
        2007 results and three months ended March 31, 
        2006 results at current Japanese yen exchange 
        rate, the amounts in Japanese yen are calculated 
        by the foreign currency exchange rate (middle 
        rate), being US$1.00=£¤118.05, from the Tokyo 
        Foreign Exchange Market as of March 30, 2007.

    (2) Proforma EBITDA under IFRS is EBITDA plus non-
        cash ESOP expenses and excluding one time items. 
        Proforma EBITDA under JGAAP is EBITDA plus non-
        cash ESOP expenses and recurring non operating 
        income and excluding one time items. 

    (3) Under IFRS, EBITDA for the quarter ended March 
        31, 2007 includes non-cash one time charge of 
        US$5.7m from the revaluation of a convertible 
        loan and non-cash ESOP expenses of US$2.1m. For 
        the quarter ended March 31, 2006, EBITDA includes 
        non-cash ESOP expenses of US$0.9m. Under JGAAP, 
        EBITDA for the quarter ended March 31, 2007 
        includes non-cash ESOP expenses of US$1.4m. For 
        the quarter ended March 31, 2006 there was no 
        ESOP expense. 

    (4) Under IFRS, Proforma net income for three months 
        period-to-date ended March 31, 2007 excludes a 
        one-time gain of US$97.5m from the deemed disposal

        of a subsidiary, a non-cash one time charge of 
        US$ 5.7m from the revaluation of a convertible 
        loan and non-cash ESOP expenses of US$2.1m . Under

        JGAAP, Proforma Net income for three months 
        period-to-date ended March 31, 2007 excludes a 
        one-time gain of US$105.8m from the deemed disposal

        of a subsidiary and related share issuance expenses

        of US$22.4m and non cash ESOP expenses of US$1.4m.

    (5) The previous forecast was made on March 15, 2007.

    (6) The main reason for the differences between IFRS 
        and Japan GAAP as applied to us is that Japanese 
        accounting standards take a different approach to 
        accounting for amortization of goodwill from 
        acquisitions.

    (Notes)

    (A) We define EBITDA in relation to our IFRS financial

        statements as profit (loss) before interest, tax, 
        depreciation and amortization.

    (B) We define EBITDA in relation to our JGAAP financial

        statements as operating income or loss plus 
        depreciation, amortization and amortization of 
        goodwill. 

    (C) Forecasts for fiscal 2007 are management estimates

        only; figures have not been audited or reviewed. 

    (D) Performance estimates are determined based on 
        information currently available. Due to unforeseen

        factors, actual performance may differ from 
        estimates.

    About Xinhua Finance Limited 

    Xinhua Finance Limited is China's premier financial
information and media service provider and is listed on the
Mothers Board of the Tokyo Stock Exchange (symbol: 9399)
(OTC ADRs: XHFNY). Bridging China's financial markets and
the world, Xinhua Finance serves financial institutions,
corporations and re-distributors through five focused and
complementary service lines: Indices, Ratings, Financial
News, Investor Relations, and Distribution.  Founded in
November 1999, the Company is headquartered in Shanghai,
with offices and news bureaus spanning 14 countries
worldwide. For more information, please visit
http://www.xinhuafinance.com . 


    For more information, please contact:

    Xinhua Finance

    Japan: 
     Mr. Sun Jiong
     Tel:   [phone]
     Email: [e-mail]

    China: 
     Ms Joy Tsang
     Tel:   [phone]
     Email: [e-mail] 

    Taylor Rafferty (IR Contact)

    Japan: 
     Mr. James Hawrylak
     Tel:   [phone]
     Email: [e-mail]

    United States: 
     Mr. John P. Dudzinsky
     Tel:   [phone]
     Email: [e-mail]