PRESS RELEASE

HTL'S Q1 2012 REVENUE UP 24.2%

SINGAPORE - 11 May 2012 - Amidst global economic uncertainties and difficult and challenging business conditions, mainboard-listed HTL International Holdings Limited ("HTL"), one of the world's leading leather tanners and sofa manufacturers, today reported a 24.2% rise in Q1 2012 revenue to USS$130.5 million compared with US$105.1 million in Q1 2011. Growth was recorded in all markets, except Greater China. North America market led the growth with an 81.4% increase in revenue of US$30.4 million against US$16.7 million year-on-year, followed by Asia (excluding Greater China) of 49.3% and ANZ at 27.8%.
The increase in sales turnover did not contribute to overall Group profitability due to rising raw leather and production input costs. Notwithstanding the increased tax expense of US$2.4 million (Q1 2011: US$66,000), a net forex gain of US$3.2 million (Q1 2011 net forex loss: US$3.2 million) saw the Group posting an after-tax net profit of US$1.5 million, as compared to a net loss of US$0.4 million in Q1 2011.
With trade and other receivables increasing by US$8.9 million to US$70.7 million and total inventory by US$6.5 million to US$176.0 million, the Group's net borrowings rose by US$16.4 million to US$69.5 million to meet working capital requirements. Consequently, overall net gearing as at 31 March 2012 rose to 41.4% from 31.8% at 31 Dec 2011. The Group also posted a negative free cash flow of US$15.7 million in Q1 2012 against a positive free cash flow of US$4.0 million in Q1 2011.
OPERATIONS REVIEW
Turnover from the Group's sofa business grew by 27.8% to US$123.3 million in Q1 2012 versus US$96.4 million in Q1 2011. All markets, except Greater China, contributed to increased turnover in Q1 2012, led by North America with turnover of US$29.8 million, an increase of
80.8% over Q1 2011.
HTL's sales to Europe rose marginally by 8.0% to US$58.8 million against US$54.5 million in Q1
2011. Europe remained the largest single market of the Sofa Business Unit's turnover.
As a result of the change in revenue recognition on sales to our franchisees in Domicil Home in
Germany, the Home Furnishing Business Unit revenue fell by 16.5% to US$7.2 million in Q1
2012 versus US$8.6 million in Q1 2011. If not for this change, HFBU's turnover for Q1 2012 would have been higher at US9.7 million, an increase of 12.8% over Q1 2011. The operating loss before net forex and tax declined marginally to US$1.1 million (Q1 2011: loss US$1.2 million).
OUTLOOK
The Group had continued with its strategic increase in global market share despite the difficult and challenging market conditions in Q1 2012. However, business conditions remain extremely volatile and challenging with continued pressure on business margins as a consequence of escalating input costs in raw materials and rising China production costs. Furthermore, the pace of these increases has continued to run ahead of product price increases to our customers. Therefore, the Group expects its performance to remain challenging in the next six months.
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About HTL International Holdings Limited
HTL International Holdings Limited is one of the world's leading leather tanners and manufacturers of quality leather upholstered furniture. It exports more than 95 per cent of its products to over 50 countries, to Europe, Asia-Pacific, USA and the Middle East. Its marketing offices are located in the USA, UK, Germany, China, Japan, South Korea, Taiwan, Australia and Singapore. It also has a sales distribution network in the USA, UK, Germany, Japan and Australia.
For more information, please contact: Mr Tay Kheng Hee
Director, Corporate Services
Tel: 6864 7312
Handphone: 9664 9460
Email: kh.tay@htlinternational.com

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