The Castle Group, Inc. Announces Financial Results for First Quarter 2008

  
    
  
  
    
      The Castle Group, Inc. (OTCBB:CAGU) holding company for Castle Resorts & 
      Hotels, today announced its financial results for the first quarter of 
      2008 ending March 31, 2008.
    
    
      Overall sales at the properties under contract with Castle grew to a 
      record amount of $23.5 million for the first quarter, as compared to 
      $12.5 million in the first quarter of 2007. “This 
      is indicative of the growth in the number of properties and the number 
      of units under contract this year as compared to last,” 
      said Alan Mattson, President and COO of The Castle Group, Inc. He 
      continued, “Castle’s 
      revenues mirrored this increase by growing to $6.0 million during the 
      quarter compared to $5.0 million in the first quarter of last year, in 
      large part due to these new properties”.
    
    
      Commenting on the results, Chairman and CEO of The Castle Group, Inc., 
      Rick Wall said, “While revenues grew 
      handsomely year over year, not all of this increase was translated into 
      Net Income because of our decision to increase our investment in 
      international expansion and development into Thailand and Vietnam. We 
      are strategically reinvesting some of the profits at this time in order 
      to accelerate some of our future growth initiatives.”
    
    
      First Quarter 2008 Financial Results
    
    
      Total Company revenues increased by 21% to $6.0 million for the three 
      months ended March 31, 2008, from $5.0 million in the comparable period 
      in 2007. Revenue increases resulted from new properties under contract, 
      the strengthening of the New Zealand dollar, and changes in rates and 
      occupancy at the properties under Castle’s 
      management worldwide.
    
    
      Operating Expenses during the first quarter increased 18% year over year 
      to $5.7 million as result of increases in property expenses, the 
      decrease in the exchange rate with the New Zealand dollar and corporate 
      and international staff growth in support of the new contracts signed 
      last year. In addition, during the first quarter the Company continued 
      to incur incremental travel and administrative expenses related to 
      establishing offices and personnel in Thailand and developmental 
      activities in Vietnam. “We view our 
      developmental spending in Vietnam and Thailand as an investment. Like 
      many other companies who invest in Research and Development, we are 
      spending on developing our business in these areas in order to secure 
      new revenue sources for the future,” said 
      Rick Wall, Chairman and CEO of The Castle Group, Inc.
    
    
      The Company reported that EBITDA (earnings before interest taxes, 
      depreciation and amortization) increased to $329,203 for the quarter 
      from $186,336 in the first quarter of 2007. Further, the Company’s 
      Net Income for the first quarter increased to $99,658 from $19,702 in 
      the year earlier period.
    
    
      For more information see the Company’s 
      Quarterly Report on Form 10-Q for the quarter ending March 31, 2008, as 
      filed with the Securities and Exchange Commission.
    
    
      Plans for Growth
    
    
      “We have recently observed a change in demand 
      for hotel rooms at properties on all Hawaiian islands. This is primarily 
      due to three factors: overall economic conditions, the loss of two 
      significant airlines with their lift into Hawaii and increased airfares 
      on the part of the other carriers,” said Alan 
      Mattson, COO of The Castle Group, Inc. He continued, “On 
      the other hand, our expansion into Micronesia, New Zealand, Thailand, 
      and Vietnam should tend to offset the impact of this trend for our 
      Company.”
    
    
      Rick Wall, Chairman and CEO of The Castle Group, Inc., commented, “In 
      light of the tremendous opportunities outside of Hawaii and the positive 
      reception we have received in Thailand and Vietnam, we are positioning 
      the Company for even more aggressive growth in these international 
      markets than we were initially targeting a few months ago. While this 
      will temper the bottom line growth we had been planning for 2008, we 
      believe that by being opportunistic and investing now, the Company’s 
      long term growth curve will be considerably enhanced.”
    
    
      About The Castle Group, Inc.
    
    
      Headquartered in Honolulu, The Castle Group, Inc. provides management 
      and related hospitality services to hotel and resort condominiums under 
      the trade name “Castle Resorts & Hotels.” 
      Since 1993, Castle’s geographic presence has 
      expanded from the Hawaiian Islands to additional markets throughout the 
      Asia/Pacific region, including Guam, Saipan, Thailand, and New Zealand. 
      Castle’s services include pre-opening 
      technical services, customized hotel and resort operations management, 
      state-of-the-art sales, marketing and reservations, expert property 
      management and cost-effective renovations and interior design. Castle 
      offers travelers accommodations ranging from hotel guest rooms to fully 
      equipped spacious resort condominiums.
    
    
      This press release contains forward-looking statements made under the “safe 
      harbor” provisions of the U.S. Private 
      Securities Litigation Reform Act of 1995. Forward looking statements are 
      based upon the current plans, estimates, and projections of The Castle 
      Group's management and are subject to risks and uncertainties which 
      could cause actual results to differ from the forward looking 
      statements. These include, but are not limited to, risks and 
      uncertainties outlined in the Company’s 
      periodic filings with the U.S. Securities and Exchange Commission. The 
      Castle Group does not assume any obligation to update the information 
      contained in this press release.
    
    
      This press release reports EBITDA, a measure not in accordance with U.S. 
      Generally Accepted Accounting Principles (“GAAP”), 
      which reflects the Company’s earnings without 
      the effect of depreciation, interest income or expense or taxes. Castle’s 
      management believes that in many ways it is a good alternative indicator 
      of the Company’s financial performance as it 
      removes the effects of non-cash depreciation and amortization of assets 
      as well as the fluctuations of interest costs based on the Company’s 
      borrowing history and increases and decreases in tax expense brought 
      about by changes in the provision for future tax effects rather than 
      current income