SHANGHAI, February 15, 2011 – Xinhua Finance Limited announced that the Company has resolved substantial doubt about its ability to continue as a going concern (the “GC notes”) for the consolidated fiscal year ended December 31, 2010.
The Group incurred operating loss of US$4,173 thousand (JP¥340 million) and net loss of US$113,454 thousand (JP¥9,245 million) for the consolidated fiscal year ended December 31, 2009. This was primarily due to the equity loss of affiliates as a result of Xinhua Sports and Entertainment Limited (“XSEL”) incurring a substantial loss, and the worldwide economic downturn after the subprime financial crisis hit the profitability of the Group’s existing business. These conditions raised substantial doubt about the Group’s ability to continue as a going concern.
The Group has been continuing the repositioning of its business and moving ahead. In 2010, the Company completed the sale of its outstanding shares of FTSE/Xinhua Index Limited (“FXI”), which were indirectly held via Xinhua Financial Network Limited, a wholly-owned subsidiary of the Company, to FTSE International Limited for proceeds of US$40 million. The Company then redeemed all of its outstanding 10% Senior Guarantee Notes due in 2011 in full with part of the proceeds received.
As a result, the Group has net income of US$30,883 thousand (JP¥2,517 million) for 2010 and therefore no longer in the position of liabilities in excess of assets as of December 31, 2010. Also the group will expand into new businesses with high demand and great potential growth in China to achieve improved profitability.
In view of the facts above the Group has evaluated to remove the GC notes with its auditor’s consent. Source: Xinhua Finance Press Release
