Chesswood Restates Tax Liability In Q1 2016 Results for Sale of Discontinued Business
TORONTO, ONTARIO--(Marketwired - Aug 8, 2016) - Chesswood Group Limited (the "Company" or "Chesswood") (CHW.TO) announced today its intention to restate and refile its condensed consolidated interim financial statements and related management's discussion and analysis for the three months ended March 31, 2016, to reflect the understatement of taxes payable related to the recent sale of EcoHome Financial ("EcoHome"). It is expected that the restated financial statements will be filed this week.
On February 18, 2016, the Company sold EcoHome for approximately $35.0 million and reported a gain on sale of $8.9 million, net of income taxes of $1.2 million. The Company has identified an understatement of tax expense recognized on this transaction in income from discontinued operations of $2.09 million and a corresponding understatement of its net tax liability in that amount. The restatement does not affect income from continuing operations, adjusted EBITDA or free cash flow, which remain unchanged. The error is a result of not properly reflecting Chesswood's reduced tax cost base of EcoHome resulting from the tax rollover amount elected by the entity from which EcoHome was purchased in the first quarter of 2015.
Barry Shafran, Chesswood's President and CEO stated "While this is a result of an unusual item in discontinued operations, we regret that we did not identify this issue earlier."
The key items which will reflect adjustments in the restated financial statements are:
(in CDN $000's, except EPS) | For the three months ended | |
As previously reported | Restated | |
Income from continuing operations | $2,966 | $2,966 |
Income from discontinued operations | $9,231 | $7,141 |
Net income | $12,197 | $10,107 |
Basic earnings per share from discontinued operations | $0.52 | $0.40 |
Basic earnings per share | $0.69 | $0.57 |
Diluted earnings per share from discontinued operations | $0.51 | $0.39 |
Diluted earnings per share | $0.67 | $0.55 |
About Chesswood Group Limited
The Company operates in the financial services industry with operating businesses in both Canada and the U.S. To learn more about Chesswood, visit www.ChesswoodGroup.com.
The separate websites of Chesswood Group Limited's operating businesses are at www.PawneeLeasing.com, www.WindsetCapital.com and www.BlueChipLeasing.com
This press release contains forward-looking statements that involve a number of risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Many factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.
NO STOCK EXCHANGE, SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN.
