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."
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
NOTE: In order to join this conference call, all speakers and participants will be required to provide the Conference ID Number listed above.
About SOKO Fitness & Spa Group, Inc.:
SOKO Fitness & Spa Group, Inc., an OTCBB listed company (SOKF.OB), is a leading operator of fitness centers and beauty salons and spas in Northeast China. The Company provides programs, services, and products uniquely combined with exercise, education, and nutrition to help their members lead a healthy life and achieve their fitness goals. For further information, please go to http://www.sokofitness.com .
Safe Harbor Statement
This press release may contain forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words or phrases such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this press release contain forward-looking statements. Statements that are not historical facts, including statements about SOKO's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. SOKO does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
SOKO FITNESS & SPA GROUP, INC. CONSOLIDATED BALANCE SHEETS (IN US DOLLARS) AS OF MAY 31, 2009 2008 (RESTATED) ASSETS Current assets: Cash & cash equivalents $ 1,907,640 $ 1,563,709 Restricted cash 7,233 -- Accounts receivable, net 110,541 682,694 Inventories 1,391,302 1,048,788 Advances to suppliers 993,084 1,467,861 Employee advance 54,783 249,900 Prepaid expense 146,959 340,993 Total Current Assets 4,611,542 5,353,945 Property, plant and equipment, net of accumulated depreciation 19,674,394 12,782,918 Other Assets Security Deposit 47,853 -- Deferred Rent 589,188 -- Deposit to suppliers 1,464,530 720,461 Investment advance 399,750 1,152,738 Goodwill 2,525,778 1,505,710 Total Other Assets 5,027,099 3,378,909 Total Assets 29,313,035 21,515,772 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term loans 2,196,795 2,547,244 Accounts payable, accrued expenses and other payable 471,457 1,020,232 Unearned revenue 1,909,755 514,965 Taxes payable 360,229 339,555 Contingent Liability 200,000 -- Total Current Liabilities 5,138,236 4,421,996 Stockholders' Equity Preferred Stock, $.001 par value; 10,000,000 shares authorized; - 0 - shares issued and outstanding at May 31,2009 and 2008 -- -- Common stock, $0.001 Par value; 500,000,000 shares authorized; 17,000,000 shares issued and outstanding at May 31, 2009 and 2008 17,000 17,000 Additional paid-in-capital 2,139,786 2,091,165 Additional paid-in-capital - Warrants 372,914 372,914 Accumulated other comprehensive income 1,910,752 1,625,829 Retained earnings 19,688,064 12,657,564 Total Stockholders' Equity 24,128,516 16,764,472 Noncontrolling interest 46,283 329,304 Total Equity 24,174,799 17,093,776 Total Liabilities and Stockholders' Equity $ 29,313,035 $ 21,515,772 SOKO FITNESS & SPA GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (IN US DOLLAR) FOR THE YEARS ENDED MAY 31, 2009 2008 (RESTATED) Net Sales $ 19,569,108 $ 13,963,130 Cost of Sales (6,591,906) (5,010,643) Gross Profit 12,977,202 8,952,487 Selling, General and Administrative Expenses: 5,902,059 3,536,547 Operating income 7,075,143 5,415,940 Other Income and Expenses Interest expenses (66,121) (49,177) Other income 47,012 2,357 Penalty for investors' liquidated damages (200,000) -- Other expenses (70,731) (10,328) Total Other Income and (Expense) (289,840) (57,148) Income Before Income Taxes 6,785,303 5,358,792 Provision for Income Taxes 42,667 74,381 Net Income 6,742,636 5,284,411 Less: net income (loss) attributable to the noncontrolling interest (287,865) 108,481 Net Income Attributable to SOKO Fitness & Spa Group, Inc. $ 7,030,500 $ 5,175,930 Other Comprehensive Income Foreign currency translation adjustment 284,923 1,217,693 Comprehensive Income $ 7,315,423 $ 6,393,622 Basic and Diluted Income per common share Basic $ 0.41 $ 0.45 Diluted $ 0.41 $ 0.43 Weighted average common share outstanding Basic 17,000,000 11,601,781 Diluted 17,297,931 11,903,589 SOKO FITNESS & SPA GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN US DOLLARS) FOR THE YEARS ENDED MAY 31, 2009 2008 (RESTATED) Cash Flows From Operating Activities: Net income $ 7,030,500 $ 5,175,930 Adjustments to reconcile net income to net cash provided by operating activities: Stock based compensation 48,621 -- Depreciation 1,719,398 1,016,855 Minority interest (287,865) 108,481 Liquidated damage penalty 200,000 -- Loss from disposal of fixed assets 54,809 -- Rent expense converted from leasehold improvement 163,229 -- Changes in operating assets and liabilities: Restricted cash (7,219) -- Accounts receivable 605,326 (270,326) Inventories (302,677) (584,845) Advances to suppliers 503,705 (279,736) Employee advance 198,831 (163,600) Prepaid expense 265,225 (254,681) Security deposit (47,761) -- Deferred Rent (588,061) -- Deposit to suppliers (730,864) 6,816 Accounts payable 7,283 (33,815) Unearned revenue 1,367,451 6,948 Taxes payable 15,018 203,532 Accrued expenses and other payables (829,923) (82,086) Cash provided by operating activities 9,385,023 4,849,473 Cash Flows From Investing Activities: Addition in construction in progress (5,312,845) (2,665,759) Purchase of property and equipment (3,061,979) (3,293,245) Proceeds received from disposal of fixed assets 1,316 Investment in subsidiary -- (1,687,408) Cash acquired from subsidiaries 97,594 124,447 Investment advance (399,750) (1,090,545) Cash used in investing activities (8,675,665) (8,612,510) Cash Flows From Financing Activities: Proceeds from capital contribution -- 1,000,000 Net proceeds from issuance of common stock -- 1,327,500 Proceeds from short-term loan 2,196,795 2,409,815 Repayment of short-term loan (2,588,227) -- Cash provided by (used in) financing activities (391,432) 4,737,315 Effect of exchange rate changes on cash and cash equivalents 26,005 133,316 Increase in cash and cash equivalents 343,931 1,107,594 Cash and Cash Equivalents - Beginning of the year 1,563,709 456,115 Cash and Cash Equivalents - Ending of the year $ 1,907,640 $ 1,563,709 Supplemental disclosures of cash flow information: Interest paid $ 66,121 $ 49,042 Income Taxes paid $ 74,135 $ 9,427 Non-cash investing and financing activities: Option issued for directors $ 109,898 $ --
|SOURCE SOKO Fitness & Spa Group, Inc.|
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