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Investor Meeting

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Investor Meeting

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  1. July 10, 2013Company name: Xinhua Holdings Limited (Code: 9399 Mothers) Address:DF Building 6F, 2-2-8, Minami-Aoyama, Minato-ku, Tokyo Representative: Lian Yih Hann (Chairman of the Board, CEO and CFO) Contact person: Mitsuhiro Kamiya, attorney-at-law (Skadden Arps Law Office) Telephone number: 03-3568-2600Mothers Investment - Investor Meeting ResultsDescription of meeting Date/time: July 8, 2013 (11:00 ~ 12：00) Method: Face-to-face meeting Place: Convention Hall AP Hamamatsucho B1F, Shiba Park Building B, 2-4-1, Shibakoen, Minato-ku, Tokyo Title of document: 2013 July Investor Meeting Results   Attachment: 1. Materials used at the meeting (adding the Q&As at the end)

  2. Investor Meeting July 8, 2013

  3. Changes in Business Results (2010～2012) (Unit: Thousands of US Dollars) 25,000 Sales 19,557 20,000 17,018 Ordinary Loss 14,212 15,000 10,000 5,000 0 -5,000 -4,391 -6,677 -7,590 -10,000 2010 2011 2012 There has been no increase in sales over the past three years, and the Company has been facing hard times, posting ordinary loss three years in a row.

  4. Major Efforts (2010～） New Business Kijoon, GMS, U-Learning Education Business Entry Withdrawal Environment/Lifestyle Did not reach the stage of taking shape as a business. Existing Business MNI, SMRA, etc. US Business Withdrawal FTSE, Fortune China, etc. Withdrawal/Scale-down Chinese Business 2010 2011 2012 2013 The Company failed to succeed in any of the new businesses, and also withdrew from, or conducted a scale-down of, each of the existing businesses. As such, the Company has not been able to achieve any results that would enable it to expand its business.

  5. Last Chance for Self-Revitalization (Thousands of US Dollars) Total assets 47,532 50,000 45,000 Net assets 40,000 35,000 27,628 30,000 23,026 25,000 20,000 13,586 14,711 15,000 7,720 10,000 5,000 0 2010 2011 2012 The Company has been suffering from a decline in both total assets and net assets over the past three years, and 2013 may be the last chance for the Company to achieve revitalization on its own.

  6. New Management Team Personal History and Strengths ofNew CEO (Lian Yih Hann) Management change (on May 23) New team Old team Graduated from University of Pennsylvania Nomura/JAFCO Investment Inphomatch Asia (Founder/CEO) BBMF Corporation (founder/CEO) Inphosoft Pte. Ltd (director) Ginsms Inc. (director) Assumed other various positions 1994 1996－2000 2000－2001 2004－2007 2012－2013 2012－2013 Director & Chairman Director & Chairman Newly elected Wu Ji Guang Lian Yih Hann Director Director Re-elected Aloysius T. Lawn, IV Wu Ji Guang Resigned CEO CEO Newly elected Lian Yih Hann Kung Yuen-Kao Resigned Strengths: Has substantial experience in establishing and operating the business of distributing applications for mobile terminals, and has an extensive network of personal contacts related thereto. CFO & COO CFO Newly elected Lian Yih Hann Wang Bin Resigned

  7. Procurement of Necessary Funds CEO of the Company(Lian Yih Hann) First loan Second loan Total: US$1,000,000 US$500,000 US$500,000 Xinhua Holdings Limited The CEO of the Company (Lian Yih Hann) provided a loan of US$1,000,000 in total to the Company, as the initial operating funds, restructuring costs, etc.

  8. Issues Found by On-Site Inspection (Examples) Number of employees Holding company Major group companies Shanghai Headquarters Shanghai Tongxin Fortune China Hong Kong Finance/Legal China As of Dec 31, 2012 132 Employees (Decrease by 198) Peking BOABC ・・・ Japan Tokyo IR From the perspective of an efficient use of offices, the decrease in the amount of rent to be paid and the integration of functions and facilities to streamline operations would likely result in cost reduction. There are also other areas where improvements can be made.

  9. Issues that the Major Group Companies are Facing Xinhua Holdings Making Losses Issues and current status Xinhua Financial Network Competitive power issues Market share issues Fortune China XFN (Shanghai) Internal operations issues Top Sky ・ ・ ・ Financial services Shanghai Tongxin BOABC Many issues must be resolved to improve profitability. Agriculture-related services (Deconsolidated)

  10. Litigation and Other Proceedings Dispute with TopSky Nominee(Arbiration) A third party arbitration system was used to resolve the dispute with one of the TopSky nominees (Ms. Yang). Consequently, Tongxin (one of the group companies) was deconsolidated. This greatly affected the Company’s policies relating to the handling of its group companies. Awaiting decision Criminal Litigation againstMr. Andrew Kim The Company won the civil litigation involving the repayment of the loan that it provided to Mr. Kim (ex-employee), but lost the criminal litigation at the court of first instance. The case is now pending in the court of appeals. The full amount of the loan, etc. has already been accounted for as “reserves”. Affected area determined and measures already taken Notice from the Hong Kong tax authorities The Company received a notice of additional tax from the Hong Kong tax authorities for 2006/2007. The negotiations that followed such notice resulted in a considerable reduction of the amount of such additional tax. The Company made a public announcement that it will pay the negotiated amount as the relevant additional tax. Litigation against ex-directorsin the U.S. In 2011, three ex-directors were prosecuted in the US for fraud, etc., but most of the charges were later dismissed and the case was concluded in April 29, 2013. The Company was not affected by the litigation.

  11. New Approach (Option 1) Strong demand High quality China Distribution Processing Procurement Japan Manga(comic) Xinhua Game Animation Other countries ・・・ For example, the Company places itself between China which has strong demand for mobile contents and Japan which creates high-quality mobile contents, and handles the whole process from procurement to processing to distribution.

  12. New Approach (Option 2) Publisher/Author/Agent Major amusement company Game creation company Manga(comic) Game Game Animation Manga Xinhua Flow of contents Ability to Assess Sublicense Joint proposal Chinesecompany Partner Contents creationcompany For example, the Company handles the procurement (assessment) of, manages the licenses related to, and makes proposals for the actual use of (maximization of the value of), mobile contents.

  13. Future Roadmap High-Priority Issues Improvements and reform Classify issues based on priority and aim for the prompt resolution of material (high-priority) issues Solving issues Organizing issues Other issues Improvements and reform Devise Business strategy Business startup period Get the business on track New approach Followed by the second wave, the third wave… Second half First half Second half First half Second half 2013 2014 2015 Each of the high-priority issues will be treated as a matter of overriding concern. In the meantime, a new approach will be adopted from the second half of 2013 in order to achieve future growth.

  14. Q＆Ａ

  15. Q&A (Questions asked at the meeting) Q1: As regards the explanation that the Company will gradually scale down its financial service business and start shifting its core business to game and mobile contents, has the Company been successful in hiring or retaining employees with the necessary expertise who would be able to adjust to such changes? A1: We believe that the Company had a tendency to rely on the officers and employees of the companies it acquired to operate the financial services business. The Company now intends to take the initiative in procuring the necessary personnel for the business involving mobile contents, etc. Q2: As a shareholder, we believe that it would be great to have the Company conduct a drastic business reform under a new management team to enter the mobile contents business on a global basis, and we would of course like to support the Company in achieving such goal. However, as the Tokyo Stock Exchange seems to have a tendency to impose heavier restrictions as compared with the stock exchanges of other countries, we are concerned that the Tokyo Stock Exchange may intervene by issuing a stern warning or tough guidance. A2: We believe that there has been no violation of any rules of the Tokyo Stock Exchange so far.

  16. Q&A (Questions asked at the meeting) Q3: Mr. Lian Yih Hann currently assumes the office of the chairman of the board, the CEO and the CFO. Will he continue to hold all of such offices or will another person or persons take over any of such offices at some point? We are concerned that he may become ill with such a heavy burden. A3: At some point, we may engage a competent person to handle some of the work, but we do not want to rush. We would like to spend time searching for a person who would blend in with the Company’s culture. Q4: Under the old management team, the Company conducted an acquisition of the education business, etc. which ended in failure. In operating the game/media business, what kind of measures will the Company take to prevent such failure from occurring again? A4: The Company will refrain from conducting any acquisition of business, except for those from which good personnel and good value can be gained. Q5: Is there any plan to change the location of the head office? A5: We do not have any such plan at present. However, we would like to consider ways to achieve an efficient operation of the Company’s offices in Japan, Hong Kong, China, etc. upon analyzing the costs and performance of each such office.

  17. Q&A (Questions asked at the meeting) Q6: Our understanding is that Mr. Wu, the former director, received stock option on condition that he waives the right to receive remuneration for a period of one year. Was there any insincerity in the fact that he resigned from the office of a director just one month after receiving the stock option? A6: Mr. Wu has not been paid enough remuneration over a long period of time (about 10 years). He has a close relationship with Xinhua, and we believe that his contribution to the Company should be recognized to a certain degree. Mr. Wu decided that it would be difficult for him to continue to perform his duties as a director, in light of his age and health condition, also upon considering the advice of his doctor. A resignation letter has been properly submitted, and the Company therefore has no reason or grounds for objecting to such resignation. Mr. Wu, however, assured us that he will continue to support us on pending litigations, etc.

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