Substantial Shareholder:

Mr. Hong Tianzhu: 63.75% interest

Mr. Zhu Yongxiang: 28.50% interest

Company Subsidiaries:

• Texhong Textile Holdings Limited 100% Investment holding
• Texhong Textile (Taizhou) Company Limited 100%: Manufacturing and sales of yarns and grey fabrics
• Texhong Textile (Jinhua) Company Limited 100% : Manufacturing and sales of yarns and grey fabrics, dyed cloth and dress
• Texhong Textile (Suining) Company Limited 100% :Manufacturing and sales of yarns and grey fabrics, dyed cloth and dress
• Taizhou Texhong Textile Weaving Company Limited 100% Manufacturing and sales of industrial use textile products and top-grade blended-spinning
• Texhong Textile Company Limited 100% Limited 100% Manufacturing and sales of industrial use textile products and top-grade blended-spinning
• Jiansu Century Texhong textile Company Limited : Manufacturing and sales of yarns and grey fabrics, dyed cloth and dress, processing of cotton
• Taixhou Century Texhong Textile Company Limited: Manufacturing and sales of industrial use textile products and top-grade blended-spinning
• Zhejiang Century Texhong Textile Company Limited : Manufacturing and sales of top-graded spinning and fire-resistant fabrics (excluding dyed fabrics)
• Nanton century Texhong Textile Company Limited: Manufacturing and sales of yarns, grey fabrics and dyed fabrics
• Xuzhou Century Texhong Textile Company Limited: Manufacturing and sales of top-graded yarns and cloth spinning
• Xuzhou Texhong Yinfeng Textile Company Limited: Manufacturing and sales of yarns, grey fabrics and dyed fabrics
• Nantong Texhong Yinhai Industrial Company Limited: Manufacturing and sales of garment, textile and knitting products and yarns.

The Group is principally engaged in the manufacture and sale of yarn and grey fabrics. The Group is one of the largest textile cotton textile products manufacturers in the PRC. The Group's strategy is to remain competitive and create profits through the manufacture and sale of contemporary high value-added textile products. The Group also produces other types of yarn products and fabrics. During the Track period, the Group manufactured over 380 types of yarn products and over 2900 types of fabrics products. The Group has facilitated its rapid expansion and growth through low cost acquisition and upgrading of production facilities of state-owned enterprises put into liquidation. The Group has a textile manufacturing base comprising eight production plants, with a total floor area if about 218,000sq.m in Xuhzhou, Tazou and Nantong in Jiangsu Province and Jinhua in Zhejiang Province.

The Group's sales and marketing function is centralised and carried out by the sales and marketing team. The sales and marketing team focuses its effort on the agglomeration of textile enterprises in Zhejinag, Jiangsu, Guangdong and Shangdong Provinces.

The Directors believe the Group has the following principal strengths:

• Specializing in contemporary and high value-added products and its new products development capacity
• Capital cost competitive advantages
• Adaptability and operating efficiency
• Consistent high quality products and stringent quality control
• Broad customer base
• Experienced management team and lean and flexible management structure

• Reliance on spandex stretch yarn and fabrics
• Gross profit of the Group's stretch products
• Financing risk
• The Group's lease properties
• Sustainability of growth and low cost expansion
• Acquisition of assets from dissolved state-owned enterprises
• Late payment of registered capital
• Financial subsidy for the Group's site at Taizhou Economic Development Zone
• Compliance with the PRC applicable labour law and regulation
• Reliance on key management
• Reliance on the PRC market
• Volatility of prices of raw materials
• Seasonal fluctuation
• Products development
• Product liability
• Power shortages
• Breakdown of product lines
• Preferential tax treatment
• Currency conversion and foreign exchange control
• Dividend
• Difference between PRC GAAP and HK GAAP

The Group intends to implement the following strategies for its future development:

• Expansion of production capacity

The group has experience in acquiring and restructuring assets from state-owned enterprises. The Group plans to acquire other textile companies or exiting manufacturing facilities in the PRC.

The group also plans to expand through the establishment of new production facilities, particularly yarn spinning mill.

• Strengthen product development capability

The Group has developed certain new types of yarns using new fibres. The Group aims to expand its product range through the development of new yarn and fabric.

• Market expansion

The group will continue to expand its market in the PRC as well as in overseas market such as European countries, North America, Hong Kong and South Korea. Apart from geographical expansion, the Group will also expand the scope of its target customers.

• Upgrading of information system

To improve its operating efficiency and hence its competitiveness, the Group ill install a management information system which improves its information flow and administration in the management, operation and accounting aspects.

The net proceeds from New Issues, after deducting related expenses, (on the basis that the Over-allotment Option is not exercised) are estimated to be approximately HK$183.3million, The Group at present intends to apply the net proceeds as follows: