XFMedia Announces Financial Results for the First Quarter 2008

BEIJING, May 12 /Xinhua-PRNewswire-FirstCall/ -- Xinhua Finance Media Limited ("XFMedia" or "the Company"; Nasdaq: XFML), a leading media group in China, today announced its unaudited financial results for the first quarter ended March 31, 2008.

  First Quarter 2008 Highlights
  -- Net revenue for the first quarter exceeded mid-point guidance by 33.5%
     to $36.7 million
  -- Strong y-o-y performance in adjusted EBITDA (non-GAAP)(1) growing by
     70% to $3.1 million
  -- Adjusted net income(1) per diluted ADS for the first quarter of 2008
     was $0.02
  -- Continued expansion in Broadcast, Print, and Outdoor, our higher margin
     businesses
  -- Full year 2008 net revenue forecast increased to range from $195
     million to $205 million and full year 2008 adjusted net income per
     diluted ADS estimated to range from $0.31 to $0.33
  -- Second quarter 2008 net revenue estimated to range from $48 million to
     $50 million and adjusted net income per diluted ADS to range from $0.07
     to $0.09



"We are pleased to report a great start to the year," said Ms Fredy Bush, XFMedia's Chief Executive Officer, "with strong year-over-year growth for the first quarter and overall results ahead of management forecasts.  We focused on expanding our higher margin businesses such as Broadcast, Print and Outdoor. Integration has also been proceeding smoothly, with Production integrated into the Broadcast Group and Research integrated into the Advertising Group, giving us three business groups from five before.  Current ranking for the NMTV satellite station reached a high of 23rd out of 35 provincial satellite stations in April 2008, boosted by the growing popularity of our Fortune China TV programs and the launch of 'The Scene', a daily lifestyle program for the upwardly mobile."

"In line with our promised expansion in Print, we announced the launch of Investor Journal, a weekly newspaper aimed at informing the growing retail investor market.  We also formed the Xinhua Media Entertainment subsidiary and partnered with China Film Group to focus on Sino-US film development, production, and pre-production.  Capitalizing on these opportunities, we continue to solidify our market position as a leading media group in China," Ms Bush added.

  (1) In this quarter, the definitions of adjusted EBITDA and adjusted net
      income have been revised to better reflect the Company's underlying
      financial and operational performance.  Please refer to Chart 8 for
      detailed calculations of adjusted EBITDA and adjusted net income.


  First Quarter 2008 Financial Results


The following is a summary of our financial results for the first quarter of 2008:

  Chart 1: Summary of financial results

                               3 months 3 months 3 months
                                ended    ended    ended   08Q1 vs  08Q1 vs
                               Mar 31,  Mar 31,  Dec 31,   07Q1     07Q4
  In US millions                 2008     2007     2007   growth % growth %
  Net revenue                    36.7     16.7     48.5     120%     -24%
  Adjusted EBITDA(1)              3.1      1.8      9.9      70%     -69%
  Net income (loss)(2)           (8.3)    12.6      4.2      N/A      N/A
  Net income per ADS
   - diluted(4)                $(0.13)   $0.23    $0.06      N/A      N/A
  Adjusted net income(1),(3)      1.4      1.9      8.6     -23%     -83%
  Adjusted net income per
   ADS - diluted(4)             $0.02    $0.04    $0.12     -50%     -83%

  (1) In this quarter, the definitions of adjusted EBITDA and adjusted net
      income have been revised to better reflect the Company's underlying
      financial and operational performance.  Please refer to Chart 8 for
      detailed calculation of adjusted EBITDA and adjusted net income.
  (2) The year-on-year decrease in net income is primarily due to a one-time
      tax gain of $12.3 million in the first quarter of 2007, and for the
      first quarter of 2008 increased share-based compensation expense and
      costs for Sarbanes-Oxley compliance.  The sequential decrease in net
      income is primarily due to seasonality, share-based compensation
      expense, and costs for Sarbanes-Oxley compliance for the first quarter
      of 2008.
  (3) The year-on-year decrease in adjusted net income is primarily due to
      increased tax provisions and costs for Sarbanes-Oxley compliance for
      the first quarter of 2008.  The sequential decrease in adjusted net
      income is primarily due to seasonality and costs for Sarbanes-Oxley
      compliance for the first quarter of 2008.
  (4) Please refer to Chart 9 for weighted average number of ADS on a
      diluted basis.


  Net Revenue


Net revenue for the first quarter of 2008 was $36.7 million, up 120% year- over-year from $16.7 million in the first quarter of 2007 or down 24% sequentially from $48.5 million in the fourth quarter of 2007.  The primary reason for quarter-on-quarter sequential decline is the seasonality of the media industry, which historically is impacted in the first quarter by the Chinese New Year holiday.  This year's first quarter slowdown in advertising was further impacted by the National People's Congress of China held in March.

Net Revenue by type and business group

The following is a summary of net revenue by business group reconciled to types of revenue provided in the accompanying consolidated financial statements for the first quarter of 2008.  Please note that as of first quarter 2008, our business groups have been integrated from five (Advertising, Broadcast, Print, Production, and Research) to three, with Production integrated into Broadcast and Research integrated into Advertising.

  Chart 2: Revenue breakdown by type and business group

  In US millions         Advertising(1)  Broadcast(2)    Print        Total
  Net revenue:
    Advertising services        16.9          3.4         0.8         21.1
    Content production            --          0.6          --          0.6
    Advertising sales            4.6          6.8         3.4         14.8
    Publishing services           --           --         0.2          0.2
  Total net revenue:            21.5         10.8         4.4         36.7

  (1) In the first quarter of 2008, the former Research Group was integrated
      into the Advertising Group.
  (2) In the first quarter of 2008, the former Production Group was
      integrated into the Broadcast Group.


  Advertising Group


Net revenue for the Advertising Group for the first quarter of 2008 was $21.5 million, up 159% year-over-year from $8.3 million in the first quarter of 2007. Net revenue for the first quarter of 2008 was down 29% sequentially from $30.1 million in the fourth quarter of 2007, primarily due to seasonality.

  Chart 3: Revenue breakdown of the Advertising Group

                    3 months  3 months         3 months   3 months
                      ended     ended            ended      ended
  In US              Mar 31,   Mar 31,  Growth  Mar 31,    Dec 31,   Growth
   millions           2008       2007      %     2008       2007       %
  Advertising(1):
   Television           --       1.0    -100%      --        4.6     -100%
   Print/Online        6.4       4.8      35%     6.4       12.8      -50%
   Outdoor/Other       6.5       1.5     313%     6.5        6.0        6%
   BTL Marketing       7.4        --       --     7.4        5.5       35%
   Research(2)         1.2       1.0      28%     1.2        1.2        5%
  Subtotal:           21.5       8.3     159%    21.5       30.1      -29%

  (1) In the first quarter of 2008, the former Television business of the
      Advertising Group was migrated into the Broadcast Group.
  (2) In the first quarter of 2008, the former Research Group was integrated
      into the Advertising Group. The 2007 comparative numbers are adjusted
      accordingly.


  Broadcast Group


Net revenue for the Broadcast Group for the first quarter of 2008 was $10.8 million, up 116% year-over-year from $5.0 million in the first quarter of 2007 or down 17% sequentially from $12.9 million in the fourth quarter of 2007, primarily due to seasonality.

  Chart 4: Revenue breakdown of the Broadcast Group

                 3 months    3 months          3 months    3 months
                   ended       ended             ended       ended
  In US           Mar 31,     Mar 31,  Growth   Mar 31,     Dec 31,  Growth
   millions        2008        2007      %        2008        2007      %
  Broadcast:
   Television(1)    5.8         3.8     52%        5.8         3.7     55%
   Radio            1.6         0.4    283%        1.6         2.1    -24%
   Mobile           2.8          --      --        2.8         5.3    -47%
   Production(2)    0.6         0.8    -26%        0.6         1.8    -68%
  Subtotal:        10.8         5.0    116%       10.8        12.9    -17%

  (1) In the first quarter of 2008, the former Television business of the
      Advertising Group was migrated into the Broadcast Group.
  (2) In the first quarter of 2008, the former Production Group was
      integrated into the Broadcast Group. The 2007 comparative numbers are
      adjusted accordingly.


  Print Group


Net revenue for the Print Group for the first quarter of 2008 was $4.4 million, up 31% year-over-year from $3.4 million in the first quarter of 2007 or down 18% sequentially from $5.4 million in the fourth quarter of 2007, primarily due to seasonality.

  Chart 5: Revenue breakdown of the Print Group

                 3 months   3 months          3 months    3 months
                   ended     ended             ended        ended
  In US           Mar 31,    Mar 31,  Growth   Mar 31,     Dec 31,   Growth
   millions        2008       2007      %       2008        2007       %
  Print:
   Newspaper        2.3       1.9       21%      2.3         2.6      -11%
   Magazines        2.1       1.5       44%      2.1         2.8      -25%
  Subtotal:         4.4       3.4       31%      4.4         5.4      -18%


  Gross Profit


Gross profit for the first quarter of 2008 was $13.1 million, up 161% year-over-year from $5.0 million in the first quarter of 2007 or down 29% sequentially from $18.6 million in the fourth quarter of 2007.  Adjusted gross profit (non-GAAP), defined as gross profit before amortization of intangible assets from acquisitions, for the first quarter of 2008 was $15.1 million, up 147% year-over-year from $6.1 million in the first quarter of 2007 or down 26% sequentially from $20.5 million in the fourth quarter of 2007.  We provide adjusted gross profit to break out the amortization of intangible assets from acquisitions charged within cost of revenue.  Chart 6 provides a breakdown of adjusted gross profit by business group.

  Chart 6: Reconciliation for adjusted gross profit by business group

  In US millions                      Advertising  Broadcast  Print   Total
  Gross Profit                            6.1         4.0      3.0     13.1
  Amortization of intangible assets
   from acquisitions(1)                   0.4         1.4      0.2      2.0
  Adjusted gross profit                   6.5         5.4      3.2     15.1

  (1) Amortization of intangible assets from acquisitions includes assets
      such as client database, brand names, and production inventory.


  Operating Expenses


Operating expenses for the first quarter of 2008 were $19.3 million, up 194% year-over-year from $6.6 million in the first quarter of 2007 or up 54% sequentially from $12.5 million in the fourth quarter of 2007.  The year-on-year and sequential increases are mainly due to an increase in selling and marketing expenses in line with increased revenue, increased share based compensation expense, and costs for Sarbanes-Oxley compliance.

Total operating expenses were composed of selling and marketing expenses and general and administrative expenses.  Selling and marketing expenses for the first quarter of 2008 were $5.1 million, up 225% year-over-year from $1.6 million in the first quarter of 2007 or down 11% sequentially from $5.8 million in the fourth quarter of 2007.

General and administrative expenses for the first quarter of 2008 were $14.1 million, up 183% year-over-year from $5.0 million in the first quarter of 2007 or up 110% sequentially from $6.7 million in the fourth quarter of 2007.  Included in general and administrative expenses was $4.9 million of share based compensation expenses.

Adjusted EBITDA (non-GAAP)

Adjusted EBITDA (non-GAAP), defined as earnings before one time items, other income, interest income and expense, taxes, depreciation, amortization of intangible assets from acquisitions and share-based compensation expenses, for the first quarter of 2008 was $3.1 million, up 70% year-over-year from $1.8 million in the first quarter of 2007 or down 69% sequentially from $9.9 million in the fourth quarter of 2007.  The primary reasons for sequential decline in adjusted EBITDA are seasonality and the Sarbanes-Oxley compliance process.  For a reconciliation from income from operations to adjusted EBITDA, refer to Chart 8.

  Chart 7: Adjusted EBITDA by business group

  In US millions                 Advertising  Broadcast    Print     Total
  Adjusted EBITDA by
   business group                     2.9        3.1        1.7       7.7
  Less: net head office expenses                                     (4.6)
  Adjusted EBITDA                                                     3.1


  Net Income and Adjusted Net Income (non-GAAP)


Net loss for the first quarter of 2008 was $8.3 million, down by $20.9 million year-over-year from net income of $12.6 million in the first quarter of 2007 or down by $12.5 million sequentially from net income of $4.2 million in the fourth quarter of 2007. The net income of $12.6 million for first quarter of 2007 included a one-time tax gain of $12.3 million.  The primary reasons for the year-on-year decline are the one-time tax gain, increased share based compensation expense, and higher costs to support Sarbanes-Oxley compliance.  The primary reasons for the sequential decline in net income are seasonality, increased share based compensation expense, and costs for Sarbanes-Oxley compliance for the first quarter of 2008.

Adjusted net income (non-GAAP), defined as net income before one-time items, amortization of intangible assets from acquisitions, share-based compensation expenses and imputed interest, for the first quarter of 2008 was $1.4 million, down 23% year-over-year from $1.9 million in the first quarter of 2007 or down 83% sequentially from $8.6 million in the fourth quarter of 2007.  The primary reasons for year-over-year decline in adjusted net income are increased tax provisions and costs for Sarbanes-Oxley compliance.  The primary reasons for sequential decline in adjusted net income are seasonality and costs for Sarbanes-Oxley compliance.  For a reconciliation from net income to adjusted net income, please refer to Chart 8.

Outlook for second quarter and full year of 2008

XFMedia estimates its net revenue for the second quarter of 2008 will range from $48 million to $50 million.  Second quarter adjusted net income per ADS is estimated to range from $0.07 to $0.09 per diluted ADS based on 81.8 million total ADS equivalent average shares outstanding.

XFMedia is raising its estimate of net revenue for full year 2008 to range from $195 million to $205 million from previously forecasted range of $190 million to $200 million.  Full year adjusted net income per ADS for 2008 is estimated to range from $0.31 to $0.33 per diluted ADS based on 82.7 million total ADS equivalent average shares outstanding.

XFMedia also expects that for the full year 2008, share-based compensation expense will be approximately $10 million, amortization of intangible assets from acquisitions approximately $13 million, and imputed interest approximately $4 million.  This forecast reflects XFMedia's current and preliminary view, which is subject to change.

Other Corporate Developments

Over the first quarter of 2008, the Company continued to implement its share buyback program, buying back $2.9 million for 1,017,118 ADSs.  These shares will be canceled in accordance with Cayman company law.

We also issued $30 million in convertible preferred shares to Yucaipa in February, increasing Yucaipa's total ownership of our shares from around 6% to 12% assuming full conversion.  The convertible preferred shares are subject to a one year lock-up period before they can be converted into common shares or ADSs at a conversion price of $6.00 per ADS.  The increased investment from a world-class, long-term investor like Yucaipa is a vote of confidence in both the fundamentals and growth prospects of our Company.

Conference Call Information

Following the earnings announcement, XFMedia's senior management will host a conference call on May 12, 2008 at 8:00pm (New York) / May 13, 2008 at 8:00am (Beijing) to review the results and discuss recent business activities.

  Interested parties may dial into the conference call at:

  (US) [phone] or [phone]
  (UK) [phone]
  (Asia Pacific) [phone]
  Passcode: XFML



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

  (US Toll Free) [phone]
  (International) [phone]
  Passcode: 68168556



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

About XFMedia

Xinhua Finance Media ("XFMedia"; Nasdaq: XFML) is a leading media group in China with nationwide access to the upwardly mobile demographic.  Through its synergistic business groups, Advertising, Broadcast, and Print, XFMedia offers a total solution empowering clients at every stage of the media process and connecting them with their target audience.  Its unique platform covers a wide range of media assets, including television, radio, newspaper, magazine, outdoor, online and other media assets.

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 second quarter and full year 2008 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 under U.S. GAAP, XFMedia also provides the following non-GAAP financial measures: adjusted gross profit, adjusted EBITDA and adjusted net income.  XFMedia believes that these non-GAAP financial measures provide investors with another method for assessing XFMedia's underlying operational and financial performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial results under U.S. GAAP.  For more information on these non-GAAP financial measures, please refer to Chart 8 of this release.

To provide investors with a better understanding of our underlying operational and financial performance, starting from this quarter, XFMedia has adopted the measure "adjusted gross profit", defined as gross profit excluding amortization of intangible assets from acquisitions, and has changed the methodology of presenting "adjusted EBITDA", by defining adjusted EBITDA as earnings before one time items, other income, interest income and expense, taxes, depreciation, amortization of intangible assets from acquisitions and share-based compensation expenses, and "adjusted net income", by defining adjusted net income as net income before amortization of intangible assets from acquisitions, imputed interest, share-based compensation expenses and one-time items.

XFMedia believes these non-GAAP financial measures are useful to management and investors in assessing the performance of the Company and assists 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 gross profit, adjusted 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.

  The following is a reconciliation of our non-GAAP financial results:

  Chart 8: Reconciliation of non-GAAP financial results

                                                 3 months  3 months 3 months
                                                  ended     ended    ended
                                                  Mar 31,   Mar 31,  Dec 31,
  In US millions                                   2008      2007     2007
  Income (loss) from operations                    (6.2)      0.7      6.0
  Interest income                                   0.6       0.5      1.5
  Other income, net                                 0.3         -      0.8
  Depreciation                                      0.8       0.4      0.6
  Amortization of intangible assets from
   acquisitions                                     3.6       1.6      2.7
  Amortization of intangible assets from
   long-term contracts                              1.2       1.5      1.2
  Share-based compensation expenses                 4.9       1.4      0.6
  Adjusted EBITDA (2007 definition)                 5.2       6.1     13.4
  Interest income                                  (0.6)     (0.5)    (1.5)
  Other income, net                                (0.3)       --     (0.8)
  One time items                                     --      (2.3)      --
  Amortization of intangible assets from
   long-term contracts                             (1.2)     (1.5)    (1.2)
  Adjusted EBITDA (2008 definition)                 3.1       1.8      9.9

  Net income (loss)                                (8.3)     12.6      4.2
  One time items(1)                                  --     (15.5)      --
  Amortization of intangible assets from
   acquisitions                                     3.6       1.6      2.7
  Amortization of intangible assets from
   long-term contracts                              1.2       1.5      1.2
  Share-based compensation expenses                 4.9       1.4      0.6
  Imputed interest                                  1.2       1.8      1.1
  Adjusted net income (2007 definition)             2.6       3.4      9.8
  Amortization of intangible assets from
   long-term contracts                             (1.2)     (1.5)    (1.2)
  Adjusted net income (2008 definition)             1.4       1.9      8.6

  (1) The one time items of $15.5 million in the first quarter of 2007
      represent a $12.3 million one-time tax gain due to deferred tax effect
      arising from the reduction of income tax rate from 33% to 25%, which
      became effective on January 1, 2008, for all domestic companies and
      foreign invested enterprises in the People's Republic of China; $2.3
      million reimbursement of IPO-related expenses; and $1.0 million other
      income.


  Net income and adjusted net income per ADS and per share are as follows:


  Chart 9: Net income and adjusted net income per ADS and per share

                                      3 months     3 months      3 months
                                        ended        ended         ended
                                     Mar 31, 2008 Mar 31, 2007  Dec 31, 2007
  Net income (loss) per ADS
   - basic                              $(0.13)       $0.27         $0.06
  Net income (loss) per ADS
   - diluted                            $(0.13)       $0.23         $0.06
  Weighted average number of ADS
   - basic                           65.6 million 41.0 million  64.8 million
  Weighted average number of ADS
   - diluted                         65.6 million 57.0 million  72.1 million
  Adjusted net income per ADS
   - basic                               $0.02        $0.01         $0.13
  Adjusted net income per ADS
   - diluted                             $0.02        $0.04         $0.12
  Weighted average number of ADS
   - basic                           65.6 million 41.0 million  64.8 million
  Weighted average number of ADS
   - diluted                         72.3 million 57.0 million  72.1 million



  For more information, please contact:

  Media Contact
   Ms. Joy Tsang
   Tel:   [phone]
   Email: 

  IR Contact
   Ms. Jennifer Chan Lyman
   Tel:   [phone]
   Email: 


                  Condensed Consolidated Balance Sheets

  (In U.S. dollars)                              Mar 31,2008   Dec 31,2007
                                                  Unaudited     Unaudited
  Assets
  Current assets:
     Cash                                         69,544,776    44,436,087
     Restricted cash (Note 1)                     46,080,000    47,252,191
     Principal protected note (Note 2)            25,047,691            --
     Accounts receivable (Note 3)                 45,151,426    45,706,766
     Prepaid program expenses                      5,488,147     5,389,250
     Other current assets                         19,843,783    16,272,798
  Total current assets                           211,155,823   159,057,092
  Content production deposit and cost, net         7,857,353     8,855,896
  Property and equipment, net                      9,129,706     9,191,959
  Intangible assets, net (Note 4)                228,891,685   233,505,913
  Goodwill                                       245,767,174   180,125,488
  Investment                                         500,000       500,000
  Principal protected note (Note 2)                       --    24,909,929
  Deposits for acquisition of subsidiaries                --    25,634,000
  Other long-term asset                            7,332,528     9,021,936
  Total assets                                   710,634,269   650,802,213

  Liabilities, mezzanine equity and
   shareholders' equity
  Current liabilities:
     Bank borrowings                              36,213,749    33,780,188
     Bank overdrafts                                 499,342       960,157
     Other current liabilities                    79,536,992    40,542,213
  Total current liabilities                      116,250,083    75,282,558
  Deferred tax liabilities                        36,909,649    37,741,579
  Long term payables, non-current portion         61,561,836    69,081,763
  Total liabilities                              214,721,568   182,105,900
  Minority Interests                               2,038,406     2,060,745


  Mezzanine equity:
  Series B convertible preferred shares (par
   value $0.001; 300,000 shares authorized,
   issued and outstanding as of March 31, 2008)   29,450,000            --
  Shareholders' equity:
  Class A common shares and nonvested shares
   (par value $0.001; 143,822,874 as of December
   31, 2007 and as of March 31, 2008 shares
   authorized; 90,061,269 as of December 31,
   2007 and as of March 31, 2008 shares issued
   and outstanding)                                   90,061        90,061
  Class B common shares (par value $0.001;
   50,054,619 as of December 31, 2007 and as
   of March 31, 2008 shares authorized;
   50,054,618 as of December 31, 2007 and
   March 31, 2008 shares issued and
   outstanding)                                        7,442         7,442
  Additional paid-in capital                     443,784,465   439,516,974
  Retained earnings                               15,423,398    23,903,560
  Accumulated other comprehensive income           5,118,929     3,117,531
  Total shareholders' equity                     464,424,295   466,635,568
  Total liabilities, mezzanine equity and
   shareholders' equity                          710,634,269   650,802,213



             Condensed Consolidated Statements of Operations

                                     3 months     3 months      3 months
                                       ended        ended         ended
  (in U.S. Dollars)                Mar 31, 2008 Mar 31, 2007  Dec 31, 2007
                                     Unaudited    Unaudited     Unaudited
  Net revenue:
     Advertising services            21,176,603    9,074,956    32,427,419
     Content production                 573,453      779,715     1,776,291
     Advertising sales               14,738,927    6,622,955    13,834,490
     Publishing services                201,224      202,430       436,503
  Total net revenue                  36,690,207   16,680,056    48,474,703
  Cost of revenue:
     Advertising services            15,697,961    7,326,871    22,137,944
     Content production                 442,057      266,850       593,496
     Advertising sales                7,152,328    3,905,913     6,922,148
     Publishing services                294,292      150,924       238,480
  Total cost of revenue              23,586,638   11,650,558    29,892,068
  Operating expenses:
     Selling and distribution         5,140,842    1,579,456     5,794,457
     General and administrative      14,137,279    4,988,225     6,740,401
  Total operating expenses           19,278,121    6,567,681    12,534,858
  Other operating income (Note 5)            --    2,261,788            --
  Income (loss) from operations      (6,174,552)     723,605     6,047,777
  Other income (expenses) (Note 6)
                                       (810,563)    (716,367)     (660,440)
  Income (loss) before provision
   for income taxes and minority
   interest                          (6,985,115)       7,238     5,387,337
  Provision for income taxes
   (Note 7)                           1,339,884  (12,915,380)      719,289
  Net income (loss) before
   minority interest                 (8,324,999)  12,922,618     4,668,048
  Minority interest                     (44,829)     332,884       510,928
  Net income (loss)                  (8,280,170)  12,589,734     4,157,120
  Dividend on convertible preferred
   shares                               200,000           --            --
  Dividend declared on redeemable
  convertible preferred shares               --    1,338,333            --
  Net income (loss) attributable to
   holders of common shares          (8,480,170)  11,251,401     4,157,120
  Net income (loss) per share:
  Basic - Common Shares                  (0.065)       0.137         0.032
  Basic - American Depositary
   Shares                                (0.130)       0.274         0.064
  Diluted - Common Shares                (0.065)       0.113         0.029
  Diluted - American Depositary
   Shares                                (0.130)       0.226         0.058



             Condensed Consolidated Statements of Cash Flows

                                        3 months     3 months     3 months
                                          ended        ended        ended
                                          Mar 31,     Mar 31,       Dec 31,
  (in U.S. Dollars)                        2008         2007         2007
                                        Unaudited    Unaudited    Unaudited
  Net cash provided by/(used in)
   operating activities                 (1,554,573)  (7,460,850)  14,696,170
  Net cash provided by/(used in)
   investing activities                 (1,908,350) (14,248,357) (43,368,652)
  Net cash provided by/(used in)
   financing activities                 26,418,367  161,567,987   (3,165,011)
  Effect of exchange rate changes        2,153,245     (280,453)     922,837

  Net increase/(decrease) in cash       25,108,689  139,578,327  (30,914,656)

  Cash, as at beginning of the period   44,436,087   36,353,547   75,350,743

  Cash, as at end of the period         69,544,776  175,931,874   44,436,087


  Notes to Financial Information

  1) Restricted cash

     Restricted cash is US dollar cash deposits pledged for the RMB loan
     facilities granted by banks for RMB working capital purposes.

  2) Principal protected note

     Principal protected note of $25.0 million represents investment on 100%
     Principal Protection Barrier Notes due on January 30, 2009.

  3) Accounts receivables and debtors turnover

     Debtors turnover for the fourth quarter of 2007 and first quarter of
     2008 were 87 days and 107 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 March 31, 2008 was $228.9
     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 $97.2 million
     advertising license agreement for our TV business, $71.5 million
     exclusive advertising agreement for our newspaper business, and $7.8
     million exclusive advertising agreements we entered for radio
     advertising operations in Shanghai, Beijing and Guangdong.  We are in
     the process of obtaining third-party valuations of certain identifiable
     intangible assets for the acquisitions we completed in 2007 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 in the first quarter of 2007
     represents reimbursement of IPO related expenses by Bank of New York.
     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) Other income (expenses)

     Other income (expenses) includes net interest income (expense) and net
     other income (expense).

  7) Provision for income taxes

     Provision for income taxes includes deferred tax credits of $1.0
     million and $0.8 million in the fourth quarter of 2007 and first
     quarter of 2008.


DATASOURCE: Xinhua Finance Media Limited



CONTACT: Media Contact - Ms Joy Tsang, [phone], or

; IR Contact - Ms Jennifer Chan Lyman,

[phone], or  



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