Yangtze Telecom Corp.
TSX VENTURE : SMS

Yangtze Telecom Corp.

August 30, 2005 01:04 ET

Yangtze Telecom Announces 2nd Qtr 2005 Financial Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 30, 2005) -

- Revenue increased 158% over 1st Qtr on the strength of Distance Education business -

Yangtze Telecom Corp. (TSX VENTURE:SMS) today reported its financial results for the second quarter ended June 30, 2005. All dollar amounts are in Canadian dollars unless otherwise noted.

Revenue for the three months ended June 30, 2005 was $823,000, an improvement of 158% from $329,000 in the first quarter. The increase was the direct result of a 440% growth, from $120,000 in the first quarter to $650,000 in the second quarter, in Distance Education revenue because of the successful launch of a Management Training program, consisting of four 3-month courses. Revenue from Wuhan Chengxi's Voice Information Services and SMS was $143,000, slightly lower than the $157,000 in the first quarter. The Company already announced that it has exited the SMS business in July 2005. Revenue from Credit Management Services, despite a steady increase of applicants to over 110 in August, showed a decrease of $13,000 to $29,000 in the quarter due to our not having devoted the resources to building a sales team to coordinate with the promotion through government channels.

The net loss for the quarter was $338,000 for the Company, a small improvement over the first quarter. UTT made a small profit of $9,000 compared with a loss in the last quarter. Wuhan Chengxi's loss was slightly lower at $161,000 compared with $172,000 in the last quarter. Head office expenses were about $50,000 lower per quarter compared to 2004 quarterly average of $178,000 due to lower investor relations and traveling expenses. The Company also recorded a non-cash option expense of $55,000 for the quarter.

"The rapid ramp up of our Distance Management Training program is gratifying. You will see a gradual rollout of this program across the different provinces in the country over and beyond the next twelve months. The slow revenue growth in our Credit Management Services is being addressed with urgency. While we have gained some name recognition of our Credit services through the vast network of China Enterprises Confederation, we realized we must also built a sales network to follow up with person to person selling. Over time, the Credit Management System is a great platform to introduce other value-added services. The private placement we have just negotiated will begin to provide the resources for us to go full steam ahead." said Kevin He, CEO of China United Telecom, the Company's subsidiary.

"While we are glad to see UTT regaining profitability in the second quarter, we are still in the process of paring down our losses in our Wuhan Chengxi subsidiary. Exiting the SMS business is our first decisive step. We fully expect UTT's positive momentum to continue and we are aiming to eliminate the losses at Chengxi within the next few quarters," said Emily Chen, President of Yangtze Telecom.

Yangtze Telecom's financial statements and Management's Discussion and Analysis for the three months ended March 31, 2005 are accessible on the Company's web site (www.yangtzetelecom.com) and on SEDAR (www.sedar.com).

About Yangtze Telecom Corp.

Yangtze Telecom Corp. is a provider of value-added services for mobile and fixed phone business and consumer customers in China. The Company is focused on the business applications utilizing a combination of SMS, internet and data broadcast technologies. Key applications to date are the Credit Management System and Distance Learning. For further information on Yangtze Telecom Corp., please visit the Company's web site at www.yangtzetelecom.com.

The TSX Venture Exchange has not reviewed, and does not accept responsibility for the adequacy or accuracy of, the contents of this press release.

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