SOKF..$2.65 Earnings..
SOKO Fitness & Spa Group Announces Record Financial Results for Fiscal Year; Sets Conference Call to Discuss Results
Company Symbols: NASDAQ-OTCBB:SOKF
HARBIN, China, Sept. 1 /PRNewswire-Asia-FirstCall/ -- SOKO Fitness & Spa Group, Inc. (OTC Bulletin Board: SOKF), a leading operator of fitness centers and beauty salons and spas in Northeast China, today announced record financial results for the fiscal year ended May 31, 2009.
Fiscal 2009 highlights:
-- Revenue increased 40% year-over-year to $19.6 million
-- Net profit increased 36% year-over-year to $7.0 million
-- Gross margin was 66%, compared to 64% in the prior year period
-- Operating income increased 31% year-over-year to $7.1 million
-- Fitness membership increased 30% year-over-year to 13,000
-- Beauty salon & spa customers increased 95% year-over-year to 19,500
Results of Operations
Compared to fiscal year 2008, beauty and spa revenues increased by 29.35%. The increase was driven by the increasing number of clients and the opening of new facilities. Fitness and yoga revenues increased by 98.70%. These results were driven by marketing efforts to an increase in memberships, and the acquisition of Yoga Wave and increased revenues associated with add-on services provided to members. Other revenues, which consist of beauty school tuition and related student costs, increased by 79.25%, driven by the increasing number of students and new courses.
SOKO achieved gross profits of $12.98 million for the year ended May 31, 2009, compared to $8.95 million for the previous year, an increase of 45% or approximately $4.03 million. As a percentage of revenues, gross profit margin was 66% for fiscal 2009 compared to 64% in fiscal 2008. The margin improvement was mainly driven by the shift from lower margin services and product sales to higher margin services during the year.
Operating expenses increased 66.9% year over year. The increase in operating expenses was attributable to the increase in amortization of leasehold improvement, increased rental expenses for new and existing facilities and other expenses relating to our growth in sales.
Net income for the year ended May 31, 2009 increased by approximately $1.8 million to $7.0 million as compared to $5.2 million for the previous year. The 36% net income increase year over year was mainly attributable to an increase in revenues and the Company's ongoing efforts to cut costs.
Basic earnings per share were $0.41 for 2009 as compared to $0.45 in the previous year. Fully diluted earnings per share were $0.41 for 2009 as compared to $0.43 in the pervious year. The decline in earnings per share was attributable to the dilution from the public offering in fiscal 2008.
During fiscal 2009, SOKO generated cash flow from operations of $9.39 million, an increase of 93.5% from fiscal 2008. The Company used its cash flow from operations for capital expenditures to renovate existing facilities and open/acquire new ones.
"I'm very proud that we achieved another record year despite the downturn of macro economy," said Mr. Liu Tong, Chairman, President & CEO of SOKO. "In 2009, we continued to strengthen our leading position in fitness center and beauty salon and spa operations in Northeast China. Our rapid growth resulted from the expansion of our branches and increased consumption per client due to innovative programs we developed. We will keep working on new branch expansion and new value-added programs next year."
Earnings Call
SOKO's Chief Executive Officer Liu Tong, Chief Financial Officer Yu Xia, and Corporate Secretary Jiang Judy will host a conference call for shareholders to discuss FY2009 annual earnings results at 9 am EDT on September 2, 2009.
Dial-In Number(s):
* US/Canada Toll Free Dial-in #: (866)811-8933
* Int'l/Local Dial-In #: (706)645-9773
Conference ID #: 28156610
