Xinhua Finance Media Announces Strong Financial Results for The Third Quarter 2007

Xinhua Finance Media Announces Strong Financial Results for The Third Quarter 2007

BEIJING, Nov. 13 /Xinhua-PRNewswire-FirstCall/ -- Xinhua Finance Media Limited ("XFMedia" or "the Company"; Nasdaq: XFML), China's leading diversified financial and entertainment media company, today announced its unaudited financial results for the quarter ended September 30, 2007.

   Third Quarter 2007 Highlights     -- Net revenue for the third quarter of 2007 was $40.7 million, up 118%       year-over-year from $18.7 million in the third quarter of 2006 or up       41% sequentially from $29.0 million in the second quarter of 2007. The       increase in revenue was driven by strong organic business growth and       contribution from new acquisitions.    -- EBITDA (non-GAAP), defined as earnings before interest expense, taxes,       depreciation, amortization and share-based compensation expenses, for       the third quarter of 2007 was $14.7 million, up 199% year-over-year       from $4.9 million in the third quarter of 2006 or up 62% sequentially       from $9.1 million in the second quarter of 2007.    -- Net income for the third quarter of 2007 was $9.0 million, up 964%       year-over-year from $0.8 million in the third quarter of 2006 or up       301% sequentially from $2.3 million in the second quarter of 2007.    -- Adjusted net income (non-GAAP), defined as net income before       amortization of intangible assets, imputed interest and share-based       compensation expenses, for the third quarter of 2007 was $14.9 million,       up 424% year-over-year from $2.8 million in the third quarter of 2006       or up 87% sequentially from $7.9 million in the second quarter of 2007.    -- Net income and adjusted net income per ADS and per share are shown in       the following table:          Net income per ADS - basic *               0.14         Net income per ADS - diluted *             0.13         Adjusted net income per ADS - basic *      0.23         Adjusted net income per ADS - diluted *    0.21          Net income per share - basic *             0.07         Net income per share - diluted *           0.06         Adjusted net income per share - basic *    0.12         Adjusted net income per share - diluted *  0.10          * Weighted average number of ADS - basic: 63.5 million; weighted           average number of ADS - diluted: 71.4 million; weighted average           number of share - basic: 126.9 million; weighted average number of           share - diluted: 142.8 million.   

"We are pleased to report strong financial results for the third quarter of 2007 that came from strong business growth in advertising revenue," said Ms Fredy Bush, XFMedia's Chief Executive Officer, "demonstrating our ability to capitalize on the growing advertising market in China. We look forward to progress across our business groups as we continue to leverage the prospects generated by China's dynamic development."

Third Quarter 2007 Financial Results

Net revenue for the third quarter of 2007 was $40.7 million, up 118% year- over-year from $18.7 million in the third quarter of 2006 or up 41% sequentially from $29.0 million in the second quarter of 2007.

Net Revenues by type and segment

The following is a summary of net revenue relating to each segment reconciled to amounts on the accompanying consolidated financial statements for the third quarter of 2007:

                                         Advertising   Broadcast     Print   Net revenues:       Media production                 $         -- $        --   $      --       Advertising sales                   3,801,931   4,993,633   3,551,108       Advertising services               18,763,878   3,693,157   2,110,687       Publishing services                        --          --     291,072   Total net revenues                    $22,565,809  $8,686,790  $5,952,867                                           Production   Research      Total   Net revenues:       Media production                  $ 2,073,675 $        -- $ 2,073,675       Advertising sales                          --          --  12,346,672       Advertising services                       --   1,445,257  26,012,979       Publishing services                        --          --     291,072   Total net revenues                    $ 2,073,675 $ 1,445,257 $40,724,398      Advertising Group  

Net revenue for the Advertising Group for the third quarter of 2007 was $22.6 million, up 99% year-over-year from $11.4 million in the third quarter of 2006 or up 48% sequentially from $15.3 million in the second quarter of 2007.

Television Advertising

Net revenue for Television for the third quarter of 2007 was $3.8 million, up 84% year-over-year from $2.0 million in the third quarter of 2006 or down 21% sequentially from $4.8 million in the second quarter of 2007. The sequential decrease was due to seasonality of the business. In addition, a higher portion of television programming during the quarter focused on the coverage of the 17th Party Congress and resulted in a mix of television advertisement that generated on average a lower level of revenue.

Print/Online Advertising

Net revenue for Print for the third quarter of 2007 was $9.5 million, up 92% year-over-year from $4.9 million in the third quarter of 2006 or up 59% sequentially from $6.0 million in the second quarter of 2007.

Outdoor/Other Advertising Services

Net revenue for Outdoor/Other for the third quarter of 2007 was $5.7 million, up 29% year-over-year from $4.4 million in the third quarter of 2006 or up 52% sequentially from $3.7 million in the second quarter of 2007.

We completed the acquisition of Convey Advertising Company Limited ("Convey") on July 2, 2007. Convey contributed $3.8 million in post- acquisition net revenue for the third quarter of 2007. The acquisition of Convey expands XFMedia's outdoor advertising network significantly by adding to it billboards along key transit routes linking mainland China with Hong Kong and Macau.

Excluding the contribution from Convey, net revenue was down by 50% sequentially due primarily to a lower level of event marketing activities conducted during the period leading up to the 17th Party Congress.

Below-The-Line Marketing

Net revenue for Below-The-Line Marketing for the third quarter of 2007 was $3.6 million, up 363% sequentially from $0.8 million in the second quarter of 2007. There was no comparable revenue for the Below-The-Line Marketing business in the third quarter of 2006 as this business was acquired in June of 2007. The sequential increase was primarily due to full quarter consolidation of Shanghai Singshine Marketing Service Ltd.

Broadcast Group

Net revenue for the Broadcast Group for the third quarter of 2007 was $8.7 million, up 4655% year-over-year increase from $0.2 million in the third quarter of 2006 or up 107% sequentially from $4.2 million in the second quarter of 2007. The year-over-year increase was primarily due to revenue contribution from the television business which was acquired in September of 2006.

Television

Net revenue for the television business for the third quarter of 2007 was $3.5 million, up 1806% year-over-year from $0.2 million in the third quarter of 2006 or up 48% sequentially from $2.3 million in the second quarter of 2007.

Radio

Net revenue for the radio business for the third quarter of 2007 was $1.9 million, up 61% sequentially from $1.2 million in the second quarter of 2007. There was no comparable revenue for the radio business in the third quarter of 2006 as the radio business was acquired in September 2006 and only started to generate revenue in the fourth quarter of 2006.

Mobile Services

Net revenue for the mobile services business for the third quarter of 2007 was $3.3 million, up 388% sequentially from $0.7 million in the second quarter of 2007. There was no comparable revenue for the mobile services business in the third quarter of 2006 as this business was acquired in the second quarter of 2007. The sequential increase was partially due to full quarter consolidation of Beijing Mobile Interactive Co., Ltd, which was acquired in June, 2007.

Print Group

Net revenue for the Print Group for the third quarter of 2007 was $6.0 million, up 57% year-over-year from $3.8 million in the third quarter of 2006 or up 19% sequentially from $5.0 million in the second quarter of 2007. The Print Group consists of the advertising business in newspapers and magazines.

Newspaper

Net revenue for the newspaper business for the third quarter of 2007 was $2.5 million, up 45% year-over-year from $1.7 million in the third quarter of 2006 or up 17% sequentially from $2.2 million in the second quarter of 2007.

Magazine

Net revenue for the magazine business for the third quarter of 2007 was $3.4 million, up 68% year-over-year from $2.0 million in the third quarter of 2006 or up 21% sequentially from $2.8 million in the second quarter of 2007.

Production Group

Net revenue for the Production Group for the third quarter of 2007 was $2.1 million, down 22% year-over-year from $2.7 million in the third quarter of 2006 or down 32% sequentially from $3.1 million in the second quarter of 2007. The decrease was primarily due to seasonality of distribution of TV drama series.

Research Group

Net revenue for the Research Group for the third quarter of 2007 was $1.4 million, up 100% year-over-year from $0.7 million in the third quarter of 2006 or down 1% sequentially from $1.5 million in the second quarter of 2007.

Cost of Revenues

Cost of revenues for the third quarter of 2007 was $23.3 million, up 113% year-over-year from $11.0 million in the third quarter of 2006 or up 36% sequentially from $17.2 million in the second quarter of 2007. The increase in cost of revenues was in line with the increase in net revenues, which increased by 118% year-to-year or 41% sequentially. Adjusted cost of revenue (non-GAAP), defined as cost of revenues before amortization of intangible assets, for the third quarter of 2007 was $20.4 million, up 95 % year-over- year from $10.5 million in the third quarter of 2006 or up 42% sequentially from $14.4 million in the second quarter of 2007.

   The cost of revenues for the five business segments are as follows:                                         Advertising   Broadcast      Print   Cost of revenues:       Media production                $        --   $   202,884  $        --   Advertising sales                     1,636,063     2,664,941      747,933       Advertising services             12,739,178     2,993,949       80,054       Publishing services                      --            --      283,714   Total cost of revenues              $14,375,241   $ 5,861,774  $ 1,111,701   Amortization of intangible assets      (237,557)   (2,381,048)    (307,220)   Adjusted cost of revenues           $14,137,684   $ 3,480,726  $   804,481                                             Production  Research     Total   Cost of revenues:       Media production                $ 1,302,047    $       --  $ 1,504,931   Advertising sales                            --            --    5,048,937       Advertising services                     --       696,800   16,509,981       Publishing services                      --            --      283,714   Total cost of revenues              $ 1,302,047    $  696,800  $23,347,563   Amortization of intangible assets            --            --   (2,925,825)   Adjusted cost of revenues           $ 1,302,047    $  696,800  $20,421,738      Operating Expenses  

Operating expenses for the third quarter of 2007 were $11.1 million, up 91% year-over-year from $5.8 million in the third quarter of 2006 or up 24% sequentially from $9.0 million in the second quarter of 2007.

Total operating expenses were composed of selling and marketing expenses and general and administrative expenses. Selling and marketing expenses for the third quarter of 2007 were $4.3 million, up 167% year-over-year from $1.6 million in the third quarter of 2006 or up 37% sequentially from $3.2 million in the second quarter of 2007.

General and administrative expenses for the third quarter of 2007 were $6.8 million, up 61% year-over-year from $4.2 million in the third quarter of 2006 or up 17% sequentially from $5.8 million in the second quarter of 2007. Included in the general and administrative expenses were share-based compensation expenses of US$0.5 million, resulting from grants made in 2006.

EBITDA (non-GAAP)

EBITDA (non-GAAP), defined as earnings before interest expense, taxes, depreciation, amortization and share-based compensation expenses, for the third quarter of 2007 was $14.7 million, up 199% year-over-year from $4.9 million in the third quarter of 2006 or up 62% sequentially from $9.1 million in the second quarter of 2007.

The following is a summary of EBITDA (non-GAAP) relating to each segment for the third quarter of 2007:

                                     Advertising   Broadcast     Print   Segment EBITDA (non-GAAP)         $ 6,512,142 $ 3,850,243 $ 4,090,007   Less: net head office expenses   EBITDA (non-GAAP)                                       Production    Research      Total   Segment EBITDA (non-GAAP)         $   481,723 $   375,829 $ 15,309,944   Less: net head office expenses                               (613,022)   EBITDA (non-GAAP)                                          $14,696,922  * Net head office expenses represent corporate expenses of $3.6 million less   interest income of $2.4 million and other income of $0.6 million.     Net Income and Adjusted Net Income (non-GAAP)  

Net income for the third quarter of 2007 was $9.0 million, up 964% year- over-year from $0.8 million in the third quarter of 2006 or up 301% sequentially from $2.3 million in the second quarter of 2007.

Adjusted net income (non-GAAP), defined as net income before amortization of intangible assets, imputed interest and share-based compensation expenses, for the third quarter of 2007 was $14.9 million, up 424% year-over-year from $2.8 million in the third quarter of 2006 or up 87% sequentially from $7.9 million in the second quarter of 2007.

Outlook for 2007

XFMedia maintains its full year revenue guidance of US$128 to 133 million. Fourth quarter revenue is expected to be US$42 to 47 million. This forecast reflects XFMedia's current and preliminary view, which is subject to change.

Conference Call Information

Following the earnings announcement, Xinhua Finance Media's senior management will host a conference call on November 13, 2007 at 5:00 PM (New York) / November 14, 2007 at 6:00 AM (Beijing) to review the results and discuss recent business activity.

   Interested parties may dial into the conference call at:     (US) +1-480-293-1744    (UK) +44-20-7190 1232    (Asia Pacific) +852-3009-5027   

A telephone replay will be available shortly after the call for one week at:

    (US) +1-303-590-3030 (Passcode: 3800017#)    (UK) +44-207-154-2833 (Passcode: 3800017#)    (Asia Pacific) +852-2287-4304 (Passcode: 124110#)   

A real-time webcast and replay will be also available at: http://www.xinhuafinancemedia.com/earnings

About Xinhua Finance Media Limited

Xinhua Finance Media ("XFMedia"; NASDAQ: XFML) is China's leading diversified financial and entertainment media company targeting high net worth individuals nationwide. The company reaches its target audience via TV, radio, newspapers, magazines and other distribution channels. Through its five synergistic business groups, Advertising, Broadcast, Print, Production and Research, XFMedia offers a total solution empowering clients at every stage of the media process and keeping people connected and entertained.

Headquartered in Beijing, the company has offices and affiliates in major cities of China including Beijing, Shanghai, Guangzhou, Shenzhen and Hong Kong. For more information, please visit http://www.xinhuafinancemedia.com/.

Safe Harbor

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the outlook for fourth quarter and full year 2007 and quotations from management in this announcement, as well as XFMedia's strategic and operational plans, contain forward-looking statements. XFMedia may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about XFMedia's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward- looking statement, including but not limited to the following: our growth strategies; our future business development, results of operations and financial condition; our ability to attract and retain customers; competition in the Chinese advertising and media market; changes in our revenues and certain cost or expense items as a percentage of our revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to copyright and other intellectual property rights; the expected growth of the Chinese advertising and media market; and Chinese governmental policies relating to advertising and media. Further information regarding these and other risks is included in our registration statement on Form F-1, as amended, filed with the Securities and Exchange Commission. XFMedia does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Non-GAAP Financial Measures

To supplement XFMedia's consolidated financial results presented in accordance with U.S. GAAP, XFMedia uses the following non-GAAP financial measures: adjusted cost of revenue, EBITDA and adjusted net income. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this release.

XFMedia believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity. XFMedia believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. To provide investors with a better understanding of our underlying operational and financial performance, starting from this quarter, XFMedia has adopted the measure "adjusted cost of revenue", defined as cost of revenue excluding amortization of intangible assets, and has changed the methodology of presenting "adjusted net income", by defining adjusted net income as net income excluding amortization of intangible assets, imputed interest and share-based compensation. XFMedia believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP measures which exclude share-based compensation expenses is that share-based compensation expenses have been and will continue to be a significant recurring expense in our business. A limitation of using non-GAAP adjusted cost of revenue, EBITDA and adjusted net income is that they do not include all items that impact our net income for the period. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

 Reconciliations of GAAP and non-GAAP results (in USD thousands, unaudited)                      Three months ended             Three months ended                     September 30, 2007             September 30, 2006                      GAAP  Adjustment  Non-GAAP  GAAP  Adjustment  Non-GAAP                     Results            Results  Results            Results Cost of revenue (*)  23,348   (2,926)   20,422   10,976     (482)   10,494 Operating Profit (**) 6,248    8,449    14,697    1,909    3,004     4,913 Net Income (***)      9,038    5,814    14,852      849    1,985     2,834                    Three months ended June 30, 2007                      GAAP  Adjustment  Non-GAAP                     Results            Results Cost of revenue (*)  17,209   (2,855)   14,354 Operating Profit (**) 2,757    6,316     9,073 Net Income (***)      2,254    5,680     7,934   (*)   The adjustments are for amortization for intangible assets. (**)  The adjustments are for share-based compensation expenses, interest       income, depreciation, and amortization for intangible assets. (***) The adjustments are for amortization of intangible assets, imputed       interest, and share-based compensation expenses.                          Xinhua Finance Media Limited                   Condensed Consolidated Balance Sheets              (In U.S. dollars)               September 30,        December 31,                                                     2007                2006                                                Unaudited             (Note 1)   Assets   Current assets:                            $75,350,743         $36,353,547      Cash      Restricted cash (Note 2)                 37,202,191          12,579,822      Short-term investment                    40,700,000                  --      Accounts receivable (Note 3)             40,657,189          17,403,632      Prepaid program expenses                  8,455,823           8,597,935      Other current assets                     27,579,563          22,114,480   Total current assets                       229,945,509          97,049,416   Content production deposit and cost,    net                                         6,836,842           5,854,271   Property and equipment, net                  8,674,224           4,367,329   Intangible assets, net (Note 4)            215,891,059         176,201,528   Goodwill                                   136,597,341          83,670,010   Investment                                     500,000             500,000   Deposits for acquisition of    subsidiaries                               25,634,000          29,246,500   Deposits for acquisition of    intangible asset                                   --           2,561,246   Other long-term asset                        8,563,980                  --   Total assets                              $632,642,955        $399,450,300   Liabilities and shareholders' equity   Current liabilities:      Bank borrowings                         $33,704,539         $11,218,256      Bank overdrafts                           1,525,086                  --      Other current liabilities                42,124,072         163,848,633   Total current liabilities                   77,353,697         175,066,889   Deferred tax liabilities                    33,344,407          41,168,035   Convertible loan                                    --          14,017,289   Long term payables, non-current    portion                                    72,189,021          64,937,958   Total liabilities                          182,887,125         295,190,171   Minority Interests                           4,121,929           3,010,407   Shareholders' equity:   Class A common shares and nonvested    shares (par value $0.001; 69,035,751    as of December 31, 2006 and 143,822,874    as of September 30, 2007 shares    authorized; 32,011,154 as of December 31,    2006 and 88,017,922 as of September 30,    2007 shares issued and outstanding)            88,020              32,011   Class B common shares (par value    $0.001; 50,054,619 as of December    31, 2006 and September 30, 2007    shares authorized; 50,054,618 as of    December 31, 2006 and September 30,    2007 shares issued and outstanding)             7,442               7,442   Convertible preferred shares (par    value $0.001;15,600,000 as of    December 31, 2006 shares authorized;    15,585,254 as of December 31, 2006    shares issued and outstanding and    nil as of September 30, 2007 shares    issued and outstanding)                            --              15,585   Additional paid-in capital                 423,842,031         103,155,391   Retained earnings (deficits)                19,746,440          (2,797,112)   Accumulated other comprehensive    income                                      1,949,968             836,405   Total shareholders' equity                 445,633,901         101,249,722   Total                                     $632,642,955        $399,450,300                          Xinhua Finance Media Limited              Condensed Consolidated Statements of Operations        (in U.S. Dollars)   Three months Three months Three months Nine months                                  ended       ended       ended        ended                              September   September     June 30,   September                               30, 2007    30, 2006        2007     30, 2007                              Unaudited   Unaudited   Unaudited    Unaudited   Net revenues:      Advertising services   26,012,979  12,974,827  19,165,786   54,253,721      Content production      2,073,675   2,668,838   3,050,899    5,904,289      Advertising sales      12,346,672   2,592,625   6,477,426   25,447,053      Publishing services       291,072     482,516     265,422      758,924   Total net revenues        40,724,398  18,718,806  28,959,533   86,363,987   Cost of revenues:      Advertising services   16,509,981   8,879,575  12,073,200   35,910,052      Content production      1,504,931   1,025,106   1,341,785    3,113,566     Advertising sales        5,048,937      32,968   3,613,015   12,567,865      Publishing services       283,714   1,037,963     180,902      615,540   Total cost of revenues    23,347,563  10,975,612  17,208,902   52,207,023   Operating expenses:      Selling and       distribution           4,337,558   1,621,663   3,165,211    9,082,225      General and       administrative         6,791,370   4,212,367   5,828,831   17,608,426   Total operating expenses  11,128,928   5,834,030   8,994,042   26,690,651   Other operating income    (Note 5)                         --          --          --    2,261,788   Income from operations     6,247,907   1,909,164   2,756,589    9,728,101   Other income (expense):      Interest expense       (Note 7)                (375,093)   (915,523) (2,086,990)  (3,673,022)      Interest income         2,431,529     617,994   1,858,221    4,746,584      Other, net                730,850     201,012     158,401      926,989   Income before provision    for income taxes          9,035,193   1,812,647   2,686,221   11,728,652      and minority interest   Provision for income    taxes (Note 8)             (232,016)     128,307     202,457 (12,944,939)   Net income before    minority interest         9,267,209   1,684,340   2,483,764   24,673,591   Minority interest            229,467     782,908     229,355      791,706   Equity in loss of an    investment                       --      52,211          --           --   Net income                 9,037,742     849,221   2,254,409   23,881,885   Dividend on redeemable    convertible    preferred shares                 --   2,169,227          --    1,338,333     Net income (loss)      attributable to holders      of common shares        9,037,742  (1,320,006)  2,254,409   22,543,552   Net income per share:      Basic - Common shares       0.071      (0.029)      0.018        0.227      Basic - American       Depositary Shares          0.142      (0.058)      0.036        0.454      Diluted - Common       shares                     0.063      (0.029)      0.016        0.193      Diluted - American       Depositary Shares          0.126      (0.058)      0.032        0.386                         Xinhua Finance Media Limited              Condensed Consolidated Statements of Cash Flows                                      Three months  Three months  Three months                                            ended         ended         ended                                        September     September       June 30,           (in U.S. Dollars)             30, 2007      30, 2006          2007                                       (Unaudited)   (Unaudited)   (Unaudited)   Net cash provided by operating    activities                           1,550,989    6,489,492       41,081   Net cash used in investing    activities                          (9,536,253) (59,548,936) (97,768,365)   Net cash provided by financing    activities                           1,660,617    2,449,972    2,660,996   Effect of exchange rate changes         263,683      144,605      546,121   Net decrease in cash                 (6,060,964) (50,464,867) (94,520,167)   Cash, as at beginning of the    period                              81,411,707   62,195,089  175,931,874   Cash, as at end of the period        75,350,743   11,730,222   81,411,707      Notes to Financial Information    1) 2006 condensed consolidated balance sheets      Information was extracted from the audited financial statements      included in the prospectus on Form-1 of the Company filed with the      Securities and Exchange Commission on March 8, 2007.    2) Restricted cash      Restricted cash is US dollar cash deposits pledged for the RMB loan      facilities granted by banks for RMB working capital purposes.    3) Accounts receivables and debtors turnover      Debtors turnover for the second quarter and third quarter of 2007 was      97 days and 92 days respectively. Our business groups generally granted      90 days to 180 days average credit period to major customers, which is      in line with the industry practices in the PRC.    4) Intangible assets      Net book value for intangible assets as of September 30, 2007 was      $215.9 million. It mainly represents the fair value of the long term      advertising agreements for the Broadcast and Print Group. The net book      value of the intangible assets were primarily composed of $99.8 million      advertising license agreement for our TV business, $59.8 million      exclusive advertising agreement for our newspaper business, and $7.7      million exclusive advertising agreements we entered for radio      advertising operations in Shanghai, Beijing and Guangdong. There is      derecognition of the intangible assets of $40.7 million for one of our      radio exclusive advertising agreements upon clarification of the terms      of one of our exclusive radio advertising agreements. We are in the      process of obtaining third-party valuations of certain identifiable      intangible assets for the acquisitions we completed in the second and      third quarters and hence the net book value for intangible assets is      preliminary and subject to revision once we complete the valuation      exercise.    5) Other operating income      Other operating income of $2.3 million represents reimbursement of IPO      related expenses by Bank of New York in the first quarter of 2007.      Those expenses, all of which had been recorded in the 2006 income      statement as operating expenses because they were not considered to be      directly related to the sale of securities, related primarily to audit      fees and fees paid to consultants during the listing process.    6) Amortization included in cost of sales, selling expenses, or      administrative expenses      Amortization for the second quarter and third quarter of 2007 were $3.4      million and $4.2million respectively. It mainly represents the      amortization of the intangible assets as mentioned in note 4. The      amortization for the TV license agreement was $1.3 million for both      second and third quarter of 2007. The amortization for the newspaper      exclusive advertising agreement was $0.4 million and $0.3 million for      the second and third quarter of 2007. The amortization for the radio      exclusive advertising agreements was $0.7 million and $0.3 million for      the second and third quarter of 2007. The decrease in amortization is      due to the derecognition of the intangible assets of $40.7 million as      mentioned in note 4.    7) Interest expense      Included in interest expense is imputed interest of $1.7 million and      $1.1 million for the second quarter and third quarter of 2007      respectively. It mainly represents the monthly imputed interest      expense charged on the payment obligations for the above long term      contracts. There is also a one-time adjustment of $1.3 million,      representing reversal of the imputed interest taken in first half year      of 2007 (the imputed interest for the first quarter and second quarter      of 2007 were $0.6 million and $0.6 million respectively) as a result of      clarification of terms of one of our exclusive radio advertising      agreements as mentioned also in note 4. For the TV license agreement,      the imputed interest each quarter in 2007 was $0.7 million. For the      Newspaper exclusive advertising agreement, the imputed interest for the      second quarter and third quarter of 2007 were $0.4 million and $0.3      million respectively. For radio exclusive advertising agreements, the      imputed interest for the second quarter and third quarter of 2007 were      $0.6 million and $0.1 million respectively. The sequential decrease was      driven by the fact that there is no imputed interest taken in the third      quarter of 2007 as a result of clarification of terms of one of our      exclusive radio advertising agreements as mentioned in note 4.    8) Provision for income taxes      Provision for income taxes included deferred tax credits of $0.7      million in both second quarter and third quarter of 2007.      For more information, please contact:    Media Contact:     Xinhua Finance Media    Ms. Joy Tsang    Tel:   +86-21-6113-5999    Email: joy.tsang@xinhuafinancemedia.com    IR Contact:     Xinhua Finance Media    Ms. Jennifer Chan Lyman    Tel:   +86-21-6113-5960    Email: jennifer.lyman@xinhuafinancemedia.com  

Source: Xinhua Finance Media

CONTACT: China: Joy Tsang of Xinhua Finance Media, +86-21-6113-5999, or
mobile, +86-136-2179-1577, or joy.tsang@xinhuafinancemedia.com

Web Site: http://www.xinhuafinancemedia.com/

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Profile: International Entertainment