SHANGHAI, China, Aug. 28 /Xinhua-PRNewswire-FirstCall/ -- Xinhua Finance Limited ("XFL", TSE Mothers: 9399 and OTC: XHFNY), China’s premier financial information and media service provider, today reported consolidated revenue for the first half year ended June 30 2008, under International Financial Reporting Standards ("IFRS"), of US$142.4 million, a 30% increase over the first half of 2007. Revenue growth was mainly driven by the China businesses.
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Proforma EBITDA, adjusted to exclude non-cash ESOP expenses and one-time items, increased to US$28.5 million versus US$20.3 million in the first half of 2007. During the first half of 2008, the Company incurred higher non-cash ESOP expenses and higher corporate costs versus the prior year from its Distribution subsidiary, XFMedia, due to its status as a public company. There were also one time provisions for intangible asset impairments totaling US$38.8 million relating to its subsidiaries Mergent and Kinetic in advance of the divestitures completed in July 2008. Due mainly to the above mentioned charges and higher taxation within its XFMedia subsidiary, the Company generated a net loss for the first half year of US$48 million. On a proforma basis, after excluding non-cash and one time items, proforma net income was US$2.9 million compared to proforma net income of US$1.2 million for the first half of 2007. Proforma results are provided by the Company to help investors better understand underlying operating and financial trends.
During the half year, the Company engaged a financial advisor to conduct a review of its strategic positioning. The purpose of the review was to evaluate opportunities to unlock shareholder value and focus resources on the Company’s core competency of providing information on China’s financial markets. Accordingly, the Company determined that its Mergent and Kinetic subsidiaries no longer fit within the Company’s overall strategic focus on the China markets and sold the two subsidiaries in July, receiving net cash proceeds of approximately $84 million.
Subsequent to the sales of Mergent and Kinetic, Xinhua Finance announced a tender offer on August 5, 2008 to apply $49 million of the proceeds from the sale of Mergent and Kinetic to redeem bonds at par with final payments to be made on September 9, 2008.
"With the cash generated from the sale of Mergent and Kinetic, we can now buy back almost half of our outstanding bond issue, reducing our debt and significantly lowering our interest expense burden", said CFO Mr. David Wang. "We continue to focus on streamlining our operations and implementing cost cutting measures to improve profitability and efficiency", added Mr. Wang.
XFL CEO Mr. Jae Lie stated, "We are pleased with the initial steps we have taken following our strategic review of the business. We believe that the sale of Mergent and Kinetic and the repayment of debt will position us for improved financial flexibility and enable management to concentrate on the China market, our core competency".
First Half 2008 vs. First Half 2007 (IFRS) -- unit: USD million
1H 2008 1H 2007 Variance
Revenue 142.4 109.5 30%
Proforma EBITDA (1) 28.5 20.3 40%
EBITDA (2) -22.5 12.9 -274%
Proforma Net Income (3) 2.9 1.2 143%
Net Income (4) -48.0 90.9 -153%
Continuing Operations (5)
First Half 2008 vs. First Half 2007 (IFRS) -- unit: USD million
1H 2008 1H 2007 Variance
Revenue 142.4 103.0 38%
Proforma EBITDA (1) 28.5 21.8 31%
(1) Proforma EBITDA is EBITDA excluding non-cash share-based
compensation expense and excluding one time items. Pro Forma EBITDA
for 1H 2007 has been adjusted to exclude $2.3 million in other
income previously classified as recurring in nature.
(2) EBITDA for the six months ended June 30, 2008 includes non-cash
share-based compensation expenses of US$8.2m, non-cash intangible
asset impairment charges of US$38.8m in advance of the sale of
Mergent and Kinetic, and other one time items totaling $4.0m.
(3) Proforma Net Income is calculated by taking net income and
excluding non cash share-based compensation expense, one time non
recurrent items, amortization arising from acquisitions and non-
cash imputed interest.
(4) Net income for 1H 2008 includes non-cash intangible asset
impairment charges of $38.8m from Mergent and Kinetic. Net income
for 1H 2007 includes one time gain of $97.5m from the IPO of
XFMedia in March 2007.
(5) Due to changes in the composition of our business as a result of
the divestiture or discontinuation of certain subsidiaries, we also
present results from continuing operations.
Notes:
A. We define EBITDA in relation to our IFRS financial statements as profit
or loss before interest expense, tax, depreciation and amortization.
About Xinhua Finance Limited
Xinhua Finance Limited ("XFL") 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’s proprietary content platform, comprising Indices, Ratings, Financial News, and Investor Relations, serves financial institutions, corporations and re-distributors worldwide. Through its subsidiary Xinhua Finance Media Limited (NASDAQ: XFML), XFL leverages its content across multiple distribution channels in China including television, radio, newspaper, magazine and outdoor media. Founded in November 1999, XFL is headquartered in Shanghai, with offices and news bureaus spanning 11 countries worldwide.
For more information, please visit http://www.xinhuafinance.com .
This is a press release to the public and should not be relied on as information to make an investment decision by any investor. Investors should read the Company’s Securities Report filed to the Tokyo Stock Exchange and consider the risk factors together with other information contained therein when making an investment decision. This press release contains some forward-looking statements that involve a number of risks and uncertainties. A number of factors could cause actual results, performance, achievements of the Company or industries in which it operates to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.
More Information:
Media Contact
Xinhua Finance
Ms. Joy Tsang,
Tel: +852-9486-4364 or +86-21-6113-5999
Email: joy.tsang@xinhuafinance.com
IR Contact
Xinhua Finance
Hong Kong
Mr. Charles Lau
Tel: +852-3196-3779
Email: charles.lau@xinhuafinance.com
