Texhong Acquires Yizheng Daming

China-based Texhong Textile Group Ltd., a high-value-added core-spun cotton textile manufacturer
with operations in Jiangsu and Zhejiang provinces, has acquired China-based Yizheng Chemical Fiber
Changzhou Daming Co. – a manufacturer and marketer of yarn, apparel and bed products located in
Changzhou, Jiangsu province – for 98.5 million yuan, or approximately US$1.23 million.

Yizheng Daming, owned 80-percent by Yihua Group Co. and 20-percent by Changzhou Municipal
People’s Government, has a production capacity of approximately 67,000 spindles and 104 air-jet
weaving machines. Texhong expects the acquisition will boost its yarn and fabric production
capacity by 16.8 percent and 14.4 percent, respectively, bringing its total capacity to 467,000
spindles and 826 air-jet weaving machines.

“We have accumulated a wealth of successful experience in acquisitions of state-owned
enterprises and expanded rapidly in the past years,” said Hong Tianzhu, chairman, Texhong. “The
acquisition of Yizheng Daming represents a good opportunity for the group to increase its
production capacity in a cost-effective manner. We are confident that we can fully utilize the
existing production facilities of Yizheng Daming to create synergy within the group and to generate
profits in the near future.”

September/October 2006