Zuoan Fashion enjoys meaningful double digit growth

21 May '11

5 min read

Selling and distribution expenses in the fourth quarter were RMB17.3 million ($2.6 million), or 6.7% of revenue, compared to RMB25.4 million ($3.8 million), or 12.5% of revenue in the same period last year. This percentage decrease was primarily due to the cancellation since January 2010 of brand promotion allowances that we provided our distributors as well as lower advertising expense compared to the same period last year.

Administrative expenses in the fourth quarter were RMB9.5 million ($1.4 million), or 3.7% of revenue, compared to RMB8.5 million ($1.3 million), 4.2% of revenue in the same period last year. This percentage decrease was primarily a result of tight control on growth of expenses while revenues were growing at a faster rate relatively.

Finance costs in the fourth quarter were RMB2.5 million ($0.4 million) compared to RMB0.3 million ($0.05 million) in the same period last year. This increase was primarily a result of the accrued interest for the subsidiary's convertible loans and the increase in bank borrowings.

Effective tax rate in the fourth quarter remained flat at 26.0% compared to 26.0% in the prior year period.

Net income for the fourth quarter increased 43.5% to RMB55.3 million ($8.4 million) from RMB38.5 million ($5.8 million) in the same period last year. Fourth quarter net income as a percentage of revenue was 21.4% compared to 18.9% in the prior year period.

Basic and diluted earnings per share increased to RMB0.69 ($0.10) in the fourth quarter of 2010 from RMB0.48 ($0.07) in the fourth quarter of 2009. The Company had 80.0 million shares outstanding during the quarter ended December 31, 2010.

Pro forma diluted earnings per share increased to RMB0.66 ($0.10) in the fourth quarter of 2010 from RMB0.46 ($0.07) in the fourth quarter of 2009 after the adjustment to add back interest expense related to convertible loans assumed to be converted. The Company had approximately 86.5 million pro forma weighted average diluted no of shares outstanding during the quarter ended December 31, 2010.

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Zuoan Fashion Limited

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