Selling and distribution expenses increased by 38.0% year-over-year due to an increase in freight, sales fair and packaging expenses. Advertising and promotional expense accounted for RMB3.9 million, or 0.4% of revenue, in 2010, compared with RMB4.5 million, or 0.7% of revenue, in 2009. This expense was mainly related to the sponsorship agreement with the Company’s spokesperson, Jacky Cheung, one of the leading pop stars in China.

Administrative expenses were significantly higher, rising to RMB10.1 million in 2010 from RMB2.9 million in 2009, due to an increase in the number of personnel, public company listing fees of approximately RMB2.2 million and share-based compensation expenses of approximately RMB2.2 million. Furthermore, the number of administrative and sales staff increased to 85 in 2010 compared to 62 in 2009.

Operating profit before taxes of RMB288.8 million in 2010 represented an increase of 29.8% compared with RMB222.5 million in the prior year. Operating margin was 32.1% in 2010 compared with 33.1% in 2009.

Non-IFRS operating income (ie, excluding share-based compensation expenses) in 2010 increased 30.8% to RMB290.9 million compared with RMB222.5 million in the prior year. Non-IFRS operating income margin was 32.4% in 2010 compared with 33.1% in the prior year.

Interest income was RMB0.8 million in both 2009 and 2010.

Income tax expense was RMB36.4 million in 2010, which resulted in an effective tax rate of 12.6%. This compares with income tax expense of RMB28.1 million and an effective tax rate of 12.6% in 2009.

Profit for the year increased 29.8% year-over-year to RMB252.3 million compared with RMB194.3 million. Earnings per ADS were $0.75 per ADS in 2010, compared to $0.59 per ADS in 2009. Non-IFRS earnings per ADS (excluding share-based compensation expenses) increased by 28.8% year-over-year to $0.76 per ADS in 2010.

Financial Position

As of December 31, 2010, the Company had cash and cash equivalents of RMB862.8 million. The cash balance included RMB519.9 million, or approximately $78.8 million in net proceeds from the Company's initial public offering of its American depositary shares, which was successfully completed on November 23, 2010.

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