ChinaCast Education Reports Restatement of Financial Statements for Year Ended December 31, 2010 Increasing Net Income to RMB132M
ChinaCast Education Corporation (Nasdaq: CAST) announced that the Company will be amending its Annual Report for the year ended December 31, 2010 to restate the financial statements for the year ended December 31, 2010 to reverse a write-off of certain prepayments.
The elimination of the write-off of the prepayment will result in the increase of the Company's net income for such period to approximately RMB132 million from RMB72 million. Accordingly, net income for the year ended December 31, 2010 will have increased by 43.0%, as compared to the net income for the year ended December 31, 2009. The restated financial statements are expected to result in a non-cash charge of approximately RMB2.0 million per quarter for the 29.6 quarters subsequent to December 31, 2010. Basic and diluted net income attributable to ChinaCast per share for the year ended December 31, 2010 will be increased to approximately RMB2.73 per share and RMB2.70 per share from approximately RMB1.49 per share and RMB1.47 per share, respectively.
Prepaid expenses and other current assets as at December 31, 2010 will be increased to RMB56.3 million from RMB48.2 million and non-current deposits and prepayments as at December 31, 2010 will be increased to RMB59.1 million from RMB7.4 million. The Company determined that the effect on the quarterly reports in 2011 would be insignificant, i.e., the effect on the earnings will be less than approximately 5% and approximately 2% on total assets.
The Company took the write-off in 2010 after it determined to use the RMB59.8 million balance of non-current advances as a prepayment for services which were being provided by ChinaCast Company Ltd to help the Company in its renewal of the inter-provincial value-added telecommunication service license.
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