CDC Corporation (CHINA) is planning to restate its financial situation for the three years ended December 31, 2005.

As a result of the restatement, the company said in a statement that it believes that its previously issued financial statements and corresponding reports of independent registered public accountants and press releases containing its financial information for the years ended December 31, 2004 and December 31, 2005, as well as the first, second and third quarters of 2006, should no longer be relied upon.

The most significant of the identified matters relates to 2004 and 2005 deferred taxes associated with acquired entities. The company currently estimates the restatement associated with deferred tax adjustments and other identified adjustments will increase net income by approximately US$3.2 million in 2004 and lower net income by approximately US$0.1 million in 2005.

In addition, as part of the completion of the 2006 audit by Deloitte, the company expects to adjust its previously reported 2006 results. Due to the sustained profitability of certain tax entities owned by the company, CDC expects to release the valuation allowance related to its deferred tax asset, thereby resulting in changes in net income as well as changes in balance sheet items, including goodwill and paid in capital.

CDC expects 2006 net income to increase by approximately US$2.8 million related to these adjustments which are subject to review by external auditors and are therefore subject to change prior to the furnishing of its 2006 Form 20-F which the Company currently anticipates filing by June 30, 2007.


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