EXHIBIT 99.1
BEIJING, Nov. 13, 2007 (PRIME NEWSWIRE) -- Education Corporation ("ChinaCast or the Company") (Nasdaq:CAST), one of the leading e-learning and training services providers in China, today announced its unaudited financial results for the third quarter ended September 30, 2007.
Highlights for the Third Quarter Ended September 30, 2007(1):
* Revenue increased by 25% year-over-year to RMB46.0 million (US$6.1 million) from RMB36.9 million in the same period of the prior fiscal year. * Net income increased by 66% year-over-year to RMB16.8 million (US$2.2 million) from RMB10.2 million in the same period of the prior fiscal year. * Basic and diluted earnings per share were RMB0.62 (US$0.08) and RMB0.61 (US$0.08) respectively. * Opened 8 new Daily English learning centers in Beijing, the company's first bricks and mortar schools, subsequent to the acquisition of the Modern English brand, and in so doing became a player in the market for language training in China valued at $2 billion annually. * Announced MOU to acquire a 51% stake in Wuhan Media and Communications College, the company's first post-secondary educational institution acquisition.
In addition, listing of ChinaCast shares, warrants and units on the NASDAQ Stock Market commenced on October 29, 2007, under the new tickers, CAST, CASTW and CASTU respectively.
Ron Chan, Chairman and Chief Executive Officer of ChinaCast Education Corporation commented: "We are very pleased with the strong revenue and net income growth of our core e-learning and training business for the third quarter and first nine months of the year. This quarter marked also our first entry into the bricks and mortar vocational training market with the establishment of eight new Daily English training schools in Beijing and the announcement of our first post-secondary educational school acquisition of Wuhan Media and Communications College.
The establishment of the Daily English training centers and the proposed acquisition of our first university are important milestones in our strategy to become one of the leading full-service, for-profit education companies in China. Our balance sheet remains strong and we will continue to actively seek acquisition targets in the post-secondary and vocational/career training segments that can expand and enhance the education services we offer.
We are also very pleased to have our shares commence trading on the NASDAQ Stock Market and hope that this will enhance the volume and tradability of ChinaCast shares thereby benefiting our shareholders."
Financial Results for the Third Quarter Ended September 30, 2007:
Total revenues for the third quarter came to RMB46.0 million (US$6.1 million), representing a 25% increase year-over-year. Service revenues, which are typically recurring in nature totalled RMB38.0 million (US$5.1 million) for the third quarter of 2007, up by 16% year-over-year. Equipment sales are most typically project based and carry lower margins. For the third quarter of 2007 equipment sales were RMB8.0 million (US$1.1 million), representing a 91% increase year-over-year.
ChinaCast Education also reports revenue broken out according to three different education sectors.
In millions Third Quarter First Nine Months
------------------- -------------------
2007 2007 2006 2007 2007 2006
----- ----- ----- ----- ----- -----
US$ RMB RMB US$ RMB RMB
----- ----- ----- ----- ----- -----
Post-Secondary Distance
Learning $ 2.4 17.6 13.3 $ 6.4 47.8 40.1
----- ----- ----- ----- ----- -----
K-12 Educational Content $ 2.0 15.6 21.5 $ 6.5 49.1 57.5
----- ----- ----- ----- ----- -----
Vocational/Career Training $ 1.7 12.8 2.1 $ 4.2 31.3 21.3
----- ----- ----- ----- ----- -----
Total Revenue $ 6.1 46.0 39.6 $17.1 128.2 118.9
----- ----- ----- ----- ----- -----
Revenues from the post-secondary education distance learning sector increased by 32% to RMB17.6 million ($US2.4 million) for the third quarter and were up by 19% at RMB47.8 million (US$6.4 million) for the first nine months of 2007. The total number of post-secondary students enrolled using the company's distance learning platforms grew to 121,000 at the close of the third quarter up 10% from the same period last year. This increase is attributed to the continuous growth of students enrolled in distance learning degree courses with the universities.
Revenues from the K-12 educational content delivery sector for the third quarter of 2007 came to RMB15.6 million (US$2.0 million) as compared with RMB21.5 million (US$2.7 million), a year-on-year decrease of 27%. For the first nine months of 2007 revenues from the K-12 educational content delivery sector were RMB49.1 million (US$6.5 million), a year-on-year drop of 15% owing to a drop in equipment sales compared with last year although the number of subscribing schools remained stable at 6,500.
Revenues from the vocational/career training business showed the most dramatic growth in the third quarter of 2007 with revenues totalling RMB12.8 million (US$1.7 million), up five fold from the third quarter of 2006. For the first nine months of 2007, revenues from this business line totalled RMB31.3 million, (US$4.2 million), which amounted to a 47% increase over the first nine months of 2006. The establishment of the Daily English language training service partly explains the stronger revenues, having contributed RMB2.9 million (US$0.4 million) to third quarter revenues in 2007, plus equipment sales were higher for the quarter.
Cost of sales for the third quarter amounted to RMB20.1 million (US$2.7 million) representing 53% increase year-on-year due to higher equipment sales and the opening of eight new Daily English language training centers. The gross profit for the third quarter was RMB25.9 million (US$3.5 million) representing a year-on-year increase of 9%.
Total operating expenses for the quarter were RMB10.1 million (US$1.4 million), a 3% increase year-over-year. Increases in selling and administrative expenses were offset by an increase in the management service fee.
Income before income taxes for the third quarter amounted to RMB21.9 million (US$2.9 million) representing a 25% increase year-on-year.
Net income for the third quarter increased to RMB16.8 million (US$2.2 million) representing a 66% increase year-on-year. The increase is mainly due to the increase in service revenues as well as the drop in losses attributable to discontinued operations.
Highlighted below are the earnings per share and share counts for the third quarter and first nine months of 2007 and the corresponding periods of 2006.
Per Share Data Third Quarter
----------------------------------------
2007 2007 2006
---------- ----------- -----------
USD RMB RMB
---------- ----------- -----------
Earnings per share (Basic) 0.08 0.62 0.61
---------- ----------- -----------
Share count (Basic) 27,266,564 27,266,564 16,657,872
---------- ----------- -----------
Earnings per share (Diluted) 0.08 0.61 0.58
---------- ----------- -----------
Share count (Diluted) 27,783,672 27,783,672 17,406,787
---------- ----------- -----------
First Nine Months
----------------------------------------
2007 2007 2006
---------- ----------- -----------
USD RMB RMB
---------- ----------- -----------
Earnings per share (Basic) 0.22 1.67 1.62
---------- ----------- -----------
Share count (Basic) 26,315,541 26,315,541 16,657,872
---------- ----------- -----------
Earnings per share (Diluted) 0.21 1.60 1.55
---------- ----------- -----------
Share count (Diluted) 27,469,901 27,469,901 17,389,605
---------- ----------- -----------
Financial Results for the Nine Months Ended September 30, 2007:
Total revenues for the nine months ended September 30, 2007, amounted to RMB128.2 million (US$17.1 million), representing an 8% increase year-over-year.
Cost of sales for the nine months ended September 30, 2007, amounted to RMB55.7 million (US$7.4 million) representing a 3% decrease year-on-year, primarily due to a decrease in equipment sales.
Total operating expenses for the nine months ended September 30, 2007, amounted to RMB25.2 million (US$3.4 million), a 19% increase year-over-year.
Overall, income before income taxes for the nine months ended September 30, 2007, amounted to RMB60.2 million (US$8.0 million) representing a 29% increase year-on-year.
Net income for the nine months ended September 30, 2007, increased to RMB43.9 million (US$5.9 million) representing a 63% increase year-on-year.
Cash and bank balances together with term deposits increased to RMB735.3 million (US$98.0 million) as of September 30, 2007.
Outlook for the Fiscal Year Ending December 31, 2007
ChinaCast expects its total revenue to be in the range of RMB187.5 million (US$25.0 million) to RMB195.0 million (US$26.0 million) and its net income, excluding share-based compensation expenses, to be in the range of RMB52.5 million (US$7.0 million) to RMB56.3 million (US$7.5 million) for the fiscal year ending December 31, 2007. This forecast reflects ChinaCast's current and preliminary view, actual results may differ materially.
Conference Call Information
A conference call to discuss the third quarter financial results, operating performance and business outlook will be held on Wednesday, November 14, 2007, at 8:30 am ET. The discussion will feature remarks by Ron Chan, Chairman and CEO, and Tony Sena, CFO.
Conference Call Information Date: Wednesday, November 14, 2007 Time: 8:30 am ET* Conference Dial In Numbers: US/Canada Toll Free: 1 877 874 1588 International: +1 719-325-4832 Live Webcast: www.chinacasteducation.com *ET=US Eastern Daylight Savings Time Replay Details The replay will be available from 11:00 pm ET* Wednesday November 14, 2007 until midnight ET* November 28, 2007 Conference Replay Dial In Numbers: US/Canada Toll Free: 1 888-203-1112 International: +1 719 457-0820 Pass Code: 9542103 Web Replay: www.chinacasteducation.com
Please access the website approximately 10 minutes prior to the start time in order to download a copy of the company's second quarter results presentation and to install any necessary software.
About ChinaCast Education Corporation
Established in 1999 with offices in Beijing and Shanghai, ChinaCast is one of the PRC's leading publicly listed e-learning and private education service providers. The Company provides its education services in three main education segments: post-secondary, K-12 and vocational/career. These services include interactive distance learning applications, multimedia education content, English language training and vocational/career training courses. The company is listed on the NASDAQ with the ticker symbol CAST.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995
This press release may contain statements that are forward-looking, as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of future performance, statements of management's plans and objectives, future contracts, and forecasts of trends and other matters. These projections, expectations and trends are dependent on certain risks and uncertainties including such factors, among others, as growth in demand for education services, smooth and timely implementation of new training centers and other risk factors listed in the company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006. Forward-looking statements speak only as of the date of this filing, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as "anticipate," "estimate," "expect," "believe," "will likely result," "outlook," "project" and other words and expressions of similar meaning. No assurance can be given that the results in any forward-looking statements will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act.
CHINACAST EDUCATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except share-related data)
For the three months ended
September 30,
------------------------------------
2007 2007 2006
---------- ---------- ----------
US$ RMB RMB
Revenues:
Service 5,066 37,992 32,652
Equipment 1,072 8,038 4,213
---------- ---------- ----------
6,138 46,030 36,865
---------- ---------- ----------
Cost of revenues:
Service (1,624) (12,178) (8,660)
Equipment (1,062) (7,967) (4,521)
---------- ---------- ----------
(2,686) (20,145) (13,181)
---------- ---------- ----------
Gross profit 3,452 25,885 23,684
---------- ---------- ----------
Operating (expenses) income:
Selling and marketing expenses (231) (1,713) (653)
General and administrative
expenses (1,657) (12,425) (9,657)
Foreign exchange loss (149) (1,114) (817)
Management service fee 685 5,138 1,316
---------- ---------- ----------
Total operating expenses, net (1,352) (10,132) (9,811)
---------- ---------- ----------
Income from operations 2,100 15,753 13,873
Interest income 819 6,140 3,632
Interest expense (1) (4) (4)
Income before provision for income
taxes, earnings in equity
investments, and minority
interest 2,918 21,889 17,501
Provision for income taxes (604) (4,527) (3,497)
---------- ---------- ----------
Net income before earnings in
equity investments, minority
interest, and discontinued
operations 2,314 17,362 14,004
Earnings in equity investments (31) (232) (318)
Minority interest (39) (295) (2,584)
---------- ---------- ----------
Income from continuing operations 2,244 16,835 11,102
---------- ---------- ----------
Discontinued operations:
Loss from discontinued operations -- -- 205
Minority interest in discontinued
operations -- -- (1,152)
---------- ---------- ----------
Loss on discontinued operations -- -- (947)
---------- ---------- ----------
Net income 2,244 16,835 10,155
========== ========== ==========
Net income per share
Basic 0.08 0.62 0.61
========== ========== ==========
Diluted 0.08 0.61 0.58
========== ========== ==========
Weighted average shares used
in computation:
Basic 27,266,564 27,266,564 16,657,872
========== ========== ==========
Diluted 27,783,672 27,783,672 17,406,787
========== ========== ==========
For the nine months ended
September 30,
------------------------------------
2007 2007 2006
---------- ---------- ----------
US$ RMB RMB
Revenues:
Service 14,135 106,014 91,464
Equipment 2,953 22,144 27,442
---------- ---------- ----------
17,088 128,158 118,906
---------- ---------- ----------
Cost of revenues:
Service (4,436) (33,267) (30,254)
Equipment (2,984) (22,378) (27,115)
---------- ---------- ----------
(7,420) (56,645) (57,369)
---------- ---------- ----------
Gross profit 9,668 72,513 61,537
---------- ---------- ----------
Operating (expenses) income:
Selling and marketing expenses (599) (4,496) (1,712)
General and administrative
expenses (4,456) (33,423) (26,573)
Foreign exchange loss (568) (4,257) (1,068)
Management service fee 2,262 16,967 8,147
---------- ---------- ----------
Total operating expenses, net (3,361) (25,209) (21,206)
---------- ---------- ----------
Income from operations 6,307 47,304 40,331
Interest income 1,728 12,962 6,232
Interest expense (4) (34) (14)
Income before provision for income
taxes, earnings in equity
investments, and minority
interest 8,031 60,232 46,549
Provision for income taxes (1,674) (12,559) (8,758)
---------- ---------- ----------
Net income before earnings in
equity investments, minority
interest, and discontinued
operations 6,357 47,673 37,791
Earnings in equity investments (95) (711) (704)
Minority interest (363) (2,719) (6,845)
---------- ---------- ----------
Income from continuing operations 5,899 44,243 30,242
---------- ---------- ----------
Discontinued operations:
Loss from discontinued operations (19) (139) (1,235)
Minority interest in discontinued
operations (30) (230) (2,067)
---------- ---------- ----------
Loss on discontinued operations (49) (369) (3,302)
---------- ---------- ----------
Net income 5,850 43,874 26,940
========== ========== ==========
Net income per share
Basic 0.22 1.67 1.62
========== ========== ==========
Diluted 0.21 1.60 1.55
========== ========== ==========
Weighted average shares used
in computation:
Basic 26,315,541 26,315,541 16,657,872
========== ========== ==========
Diluted 27,469,901 27,469,901 17,389,605
========== ========== ==========
CHINACAST EDUCATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share-related data)
As of As of
Sept 30, Dec 31,
2007 2006
---------------------- --------
US$ RMB RMB
Assets
Current assets:
Cash and cash
equivalents 41,034 307,752 278,067
Term deposits 57,006 427,543 442,921
Accounts receivable,
net of allowance of
RMB148 for both 2007
and 2006, respectively 4,406 33,048 41,692
Inventory -- satellite
communication related
equipment and equipment
accessories 431 3,231 3,067
Prepaid expenses and
other current assets 865 6,491 5,199
Amounts due from
related parties 245 1,838 2,583
-------- -------- --------
Total current assets 103,987 779,903 773,529
Non-current deposits 147 1,099 --
Property and equipment,
net 1,427 10,705 14,332
Acquired intangible assets,
net 2,979 22,345 14,028
Long-term investments 1,779 13,339 5,114
Deferred tax assets 6 43 172
Non-current advances to a
related party 16,285 122,139 129,866
Goodwill 259 1,943 3,538
-------- -------- --------
Total assets 126,869 951,516 940,579
======== ======== ========
Liabilities, minority
interest, and
shareholders' equity
Current liabilities:
Accounts payable 1,372 10,287 16,403
Accrued expenses and
other current
liabilities 10,302 77,260 96,204
Amounts due to related
parties 24 183 4,469
Income taxes payable 3,823 28,671 42,769
Current portion of
capital lease
obligation 9 70 146
-------- -------- --------
Total current liabilities 15,530 116,471 159,991
-------- -------- --------
Non-current liabilities:
Capital lease
obligation, net of
current portion -- -- 37
Unrecognized tax
benefits 3,453 25,899 --
-------- -------- --------
Total non-current
liabilities 3,453 25,899 37
-------- -------- --------
Total liabilities 18,983 142,370 160,028
-------- -------- --------
Minority interest 2,665 19,990 145,501
-------- -------- --------
Shareholders' equity:
Ordinary shares
(US$0.0001 par value;
100,000,000 shares
authorized in 2007 and
2006; 27,292,641 and
23,140,702 shares
issued and outstanding
in 2007 and 2006,
respectively) 3 21 18
Additional paid-in
capital 102,513 768,844 653,000
Statutory reserve 1,156 8,670 9,721
Accumulated other
comprehensive loss (787) (5,899) (2,762)
Accumulated deficit 2,336 17,520 (24,927)
-------- -------- --------
Total shareholders' equity 105,221 789,156 635,050
-------- -------- --------
Total liabilities, minority
interest, and
shareholders' equity 126,869 951,516 940,579
======== ======== ========
CHINACAST EDUCATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
For the nine months ended
September 30,
------------------------------------
2007 2007 2006
-------- -------- --------
US$ RMB RMB
Cash flows from operating
activities:
Net income 5,850 43,874 26,940
Adjustments to reconcile
net income to net cash
(used in) provided by
operating activities:
Minority interest in
continuing operations 363 2,719 6,845
Minority interest in
discontinued operations 30 230 2,067
Depreciation and
amortization 517 3,878 9,261
Amortization of deferred
share-based
compensation 71 530 1,181
Loss on disposal of
property, plant and
equipment -- -- 7
Earnings in equity
investments 95 711 704
Changes in assets and
liabilities:
Accounts receivable 747 5,604 (3,578)
Inventory (22) (164) (747)
Prepaid expenses and
other current assets (237) (1,779) 877
Amounts due from related
parties 99 745 7,047
Accounts payable (635) (4,761) 5,595
Accrued expenses and
other current
liabilities (5,605) (42,039) (2,024)
Amount due to related
parties (15) (115) 187
Income taxes payable 547 4,098 7,870
Deferred tax assets 17 129 130
Unrecognised tax
benefits 459 3,443 --
-------- -------- --------
Net cash (used in) provided
by operating activities 2,281 17,103 62,362
-------- -------- --------
Cash flows from investing
activities:
Repayment from advance to
related parties 1,223 9,170 21,812
Advance to related parties (193) (1,443) --
Return of deposit for the
purchase of equipment -- -- 2,800
Deposits for business
acquisition -- -- (10,000)
Purchase of property and
equipment (206) (1,548) (973)
Term deposits 2,050 15,378 (156,473)
Advance received from
disposal of cost method
investment 1,600 12,000 --
Proceeds from disposal of
discontinued operations,
net of cash
disposed of (1,215) (9,113) --
-------- -------- --------
Net cash provided by (used
in) investing activities 3,259 24,444 (142,834)
-------- -------- --------
Cash flows from financing
ctivities:
Repayment of capital lease
obligation (15) (111) (111)
Repayment of advances from
related parities (567) (4,251) --
Capital distribution (1,354) (10,155) (111)
Cash used in financing
activities (772) (5,793) --
-------- -------- --------
Effect of foreign exchange
rate changes (228) (1,707) (5)
Net increase (decrease) in
cash and cash equivalents 3,958 29,685 (80,588)
Cash and cash equivalents
at beginning of the period 37,076 278,067 120,368
-------- -------- --------
Cash and cash equivalents
at end of the period 41,034 307,752 39,780
======== ======== ========
(1) Dollar values are calculated at the exchange rate of
US$1=RMB7.5 for the third quarter and first nine months
of 2007.
CONTACT: ChinaCast Education Corporation
Michael J. Santos, Chief Marketing Officer & Investor Relations
Officer
(86-10) 6566-7788
mjsantos@chinacasteducation.com
IR Home Page: http://www.chinacasteducation.com
15/F Ruoy Chai Building, No. 8 Yong An-Dongli
Jianguomenwai Avenue
Beijing 100022, PRC
Advanced Investor Relations, L.L.C.
US Investor Relations Contact:
Miranda Weeks
(703) 485-6067
miranda@advancedinvestorrelations.com