Cacola FY2007 Results

SINGAPORE, 26 February 2008 – Cacola Furniture International Limited ("Cacola" or the "Group"), an integrated home and office furniture designer and manufacturer in the People’s Republic of China ("PRC"), recorded a 23.8% growth in revenue to RMB564.2 m for the financial year ended 31 December 2007 ("FY07"), compared to a revenue of RMB455.6 m in 2006 ("FY06"). The Group’s net profit for FY07 soars 64% to RMB123.3 m, or 45.8 RMB cents per share, while bottom-line growth outpaced revenue growth for the third consecutive year.

Cacola’s results take into consideration expenses incurred in relation to its listing in November 2007, as well as a provision for withholding tax on dividend paid by its PRC subsidiaries. Excluding these items, the Group would have achieved an even higher net profit of RMB131.6 m.

Mr Chau Yeung Chau (周 杨秋), Executive Chairman and founder of the Group said, "The buoyant and growing real estate industry in the PRC, our strong in-house product design and development abilities, as well as the good response to our new panel furniture series and premium range of sofas and mattresses have allowed the Group to turn in a record performance for 2007."

Performance Review

For the financial year under review, sale of panel furniture grew 29.9% to RMB329.3 m. The exceptional growth in sales was attributed to the successful launch of new products under the "Black Walnut" and "White Oak" series. Revenue for sofas recorded a 14.5% growth to RMB147.5 m, with higher sales coming from the new fabric sofas and premium leather sofas. Higher demand of high quality mattresses under the KELOG brand contributed to the 19.4% increase in revenue for this business segment to RMB87.4 m.

On a geographical basis, the Group saw an overall increase in business activity and revenue growth from both the PRC and international markets. Export market sales grew 26.1% to RMB111.6 m from RMB88.5 m the year before, driven mainly by strong contribution from the United States, Spain, South Africa, South Korea, Hong Kong and Morocco.

For the domestic market, revenue increased 23.3% to RMB452.6m, compared to RMB367.1 m a year ago. This was on the back of an expanded network of specialty stores, sales generated by the Group’s retail mega store in Dongguan, as well as higher sales to distributors, interior designers, property developers and contractors.

During the year, 41 new CACOLA specialty stores were added, bringing the total number of stores to 129. CACOLA FURNITURE INTERNATIONAL LIMITED 3

The Group’s gross profit margin improved to 33.8% from 32% in FY06. This was achieved on the back of an improved product mix and the shift towards higher margin products, as well as the Group’s ability to control raw material costs such as medium-density fibreboard.

Balance Sheet
The Group ended the year with total shareholder’s equity and net asset value per share standing at RMB311.3 m and 90.22 RMB cents respectively. At the close of FY07, cash and cash equivalents stood at RMB214.2 m.

Dividend
For the financial year 2007, the Board of Directors has proposed a first and final cash dividend of 7.13 RMB cents per ordinary share. This represents a total payout of RMB24,598,500 or 20% of net profit.

Future Plans an Outlook
Moving forward, Cacola will increase its branding and marketing activities, and step up its product design and development efforts to:
 attract new furniture distributors and retailers to operate Cacola specialty stores; and
 capture the growing middle-class consumers with higher spending power and demand for well-design and good quality furniture products.

Based on the continued demand from both the PRC and international markets, the Group has taken positive steps in ramping up its production capacity and facility for its sofas and mattresses products. The Group is also actively sourcing for choice location in Chengdu or Chongqing to set up its second retail mega store. A home-deco centre to tap on the new homebuyers market is also in the pipeline.