Cacola Q1 2008 Results

NEWS RELEASE CACOLA REPORTS 72% JUMP IN 1Q2008 NET PROFIT

SINGAPORE, 13 May 2008 – Cacola Furniture International Limited, an integrated lifestyle furniture designer and manufacturer in the PRC, has posted net profit of RMB44.9 million for the first quarter ended 31 March 2008 (“1Q2008”), a 72% increase from RMB26.1 million achieved in the corresponding period last year. This was on the back of a 38% rise in revenue to RMB188.5 million, from RMB 136.8 million in 1Q2007. Earnings per share rose 27% to 13 RMB cents, from 10.2 RMB cents in 1Q2007.

Mr Lu Ling Jia (卢领佳), CEO of Cacola said, “We’re off to a good start in the new financial year with a strong set of first quarter results. Our team’s effort to build a strong brand position via innovative furniture designs, successful retail concepts and targeted marketing activities are indeed paying off.”

OPERATIONS REVIEW

The strong performance was fuelled by surging new home sales on the domestic front as well as growing consumer awareness of Cacola’s brand of lifestyle furniture. This was supported by the Group’s expanded distribution network in the PRC from 101 at the close of 1Q2007 to 136 at the close of 1Q2008. The new specialty stores are located in different cities in the provinces of Anhui, Guangdong, Sichuan, Zhejiang and Hunan.

In addition, the Group also enjoyed a substantial increase in sales orders from South Africa, Spain, Australia and United States. Average gross margin improved slightly from 33.2% in 1Q2007 to 33.8% in 1Q2008 despite higher raw material cost, due to strong demand for Cacola’s higher-value products such as its new “Golden” series of premium sofas and the “White Oak” and “Black Walnut” series of panel furniture. The Group’s leading brand position has also enabled it to adjust its selling prices in response to the increase in raw material prices.

OUTLOOK

The Group expects the growing real estate industry in the PRC to continue to drive domestic demand for its customized panel furniture, sofa and mattress products, from real estate developers and contractors, as well as new home buyers. To capitalize on the burgeoning demand, it plans to further expand its distributor network and increase its retail points of sale.

The Group has also inked a deal to open a 6,000m2 mega store in Chongqing in the second half of the year. Said Mr Lu, “These are exciting times for Cacola. For the rest of the year, we will focus on implementing our business strategy as mapped out in our IPO prospectus, to bring about the desired return on shareholder value that we have promised.”