Weiqiao Textile Releases 2005 Financial Results

Weiqiao Textile Co. Ltd., Shandong, China, had a turnover of RMB 13.58 billion (approximately
US$1.70 billion) in 2005. This was an increase of 22.5 percent over 2004 figures. Gross profits
were up 20.8 percent to RMB 2.24 billion (US$280 million), with a gross profit margin of 16.5
percent in 2005, compared to 16.8 percent in 2004. Net profit attributable to shareholders
increased 50.5 percent to RMB 1.24 billion (US$155 million).

“We had significant growth in turnover and net profit as a result of an aggressive expansion
of value-added products and marketing,” said Zhang Bo, chairman. “We upgraded equipment, meeting
customer demand for more sophisticated products. The group maintained a high profit margin level
under our efficient operating model.”

Weiqiao Chairman Zhang Bo

The demand for greige fabric and cotton yarn boosted sales in 2005, according to
the company. Existing manufacturing plants ran at full capacity in 2005. Greige fabric production
increased 19.6 percent to 1.44 billion meters.  Cotton yarn production totaled 659,000 tons,
an increase of 21.4 percent over 2004 quantities.

Turnover in greige fabric reached RMB 6.99 billion (US$872 million), an increase of 22.6
percent over year-earlier figures. Cotton yarn increased its share of total company turnover to
39.9 percent in 2005, at a value of RMB 5.43 billion (US$677 million).

In 2005, denim fabric accounted for 8 percent of the company’s total sales — which was a
reduced production volume compared to 2004 — and reached a value of RMB 1.27 billion (US$159

Weiqiao Textile’s biggest market in 2005 was China, accounting for 54.0 percent of company

“The year 2006 is the first year of the ‘11th Five-Year Plan’ and the growth of China’s
economy will be driven more by consumption than by investment,” said Zhang. “The textile industry
will rely less on exports with growth in domestic demand. As the domestic market grows in
importance, operating risks of the textile industry will diminish. As the leading cotton textile
manufacturer in China, Weiqiao Textile will adapt to these trends.”

May/June 2006