09:42     WEIQIAO TEXTILE<02698> - Announcement (2)                           

    registration with the local AIC. The time required by China Banking       
    Regulatory Commission and the local AIC for approving/registering the     
    establishment of SWCF cannot be ascertained at this stage. There is       
    no condition precedent to the Promoters' Agreement.                       
                                                                              
    Registered capital of SWCF:                                               
    RMB400,000,000 (approximately HK$377,000,000)                             
    The following table summarizes the expected shareholding structure        
    of SWCF after the relevant capital has been fully contributed in          
    accordance with the Promoters' Agreement:                                 
                                                                              
                         Amount of capital    Approximate                     
                         to be contributed    percentage of                   
                         to SWCF              equity interests                
                         (RMB)                (%)                             
                                                                              
    The Group                                                                 
    the Company          25,000,000           6.25                            
    Industrial Park      15,000,000           3.75                            
    Weihai Weiqiao       10,000,000           2.50                            
                    ----------------------------------                        
    Sub-total            50,000,000           12.50                           
                                                                              
    Holding Company and                                                       
    its subsidiaries                                                          
    Holding Company      275,000,000          68.75                           
    Weiqiao Dyeing       50,000,000           12.50                           
    Weilian Print        25,000,000           6.25                            
                    ---------------------------------                         
    Sub-total            350,000,000          87.50                           
                    ---------------------------------                         
    Total                400,000,000          100.00                          
                    =================================                         
                                                                              
                                                                              
    Subject to the approval of China Banking Regulatory Commission, the       
    relevant capital contribution amounts set out above represent the         
    current anticipated maximum capital commitment of each of the             
    shareholders of SWCF. It is expected that the profit of SWCF shall be     
    shared among each of the shareholders of SWCF in proportion to their      
    respective equity interests in SWCF.                                      
                                                                              
    Rights and obligations:                                                   
    Each of the promoters of SWCF shall contribute to its registered          
    capital in cash in accordance with their respective interests in SWCF     
    and within 3 months after the approval for preparation for the            
    establishment of SWCF from China Banking Regulatory Commission is         
    obtained. On this basis, the Group shall contribute RMB50,000,000         
    (approximately HK$47,000,000) to the registered capital of SWCF. Such     
    sum will be paid out of the internal resources of the Group. If SWCF      
    fails to be established, its promoters shall assume the expenses          
    (which are currently estimated to be approximately RMB1,000,000 (or       
    approximately HK$940,000)) and liabilities arising from the relevant      
    preparatory work in proportion to their respective interests in           
    it.                                                                       
                                                                              
    Scope of business of SWCF:                                                
    Upon establishment, SWCF may, subject to approval from China Banking      
    Regulatory Commission, provide financial services, including but not      
    limited to, corporate finance services, credit verification,              
    insurance agency services, capital financing services and provision       
    of guarantee services to, Holding Company and its subsidiaries, any       
    companies in which Holding Company and/or its subsidiaries                
    individually or jointly own more than 20% equity interests or any         
    companies of which Holding Company or its subsidiaries is the largest     
    shareholder, but not to any independent third parties.                    
                                                                              
    The Group only proposes to hold in aggregate 12.5% equity interests       
    in SWCF. None of the Company, Industrial Park and Weihai Weiqiao          
    intend to participate in the daily operation of SWCF. Hence, the          
    Company does not consider that there is any change in its principal       
    business of the Company.                                                  
                                                                              
    4. Reasons and benefits for entering into the Promoters' Agreement        
    The Directors intend for SWCF to (a) provide flexibility to the           
    Group's financing means; (b) enhance the investment capability of the     
    Group; (c) reduce the Group's financing costs; and consequently (d)       
    enhance the efficiency of the Group's corporate fund management and       
    financing.                                                                
                                                                              
    Under the new `Regulation on the management of enterprise group           
    finance companies' (the `Regulation') which come into effect on 1         
    September 2004, certain restrictions for the establishment of finance     
    companies in the PRC have been relaxed. For example, the Regulation       
    reduces the required minimum total asset amount of the relevant           
    promoters to the finance companies from the previous RMB8 billion         
    (HK$7.55 billion) to RMB5 billion (HK$4.72 billion), and the minimum      
    net asset ratio of the relevant promoters to the finance companies        
    from the previous 35% to 30%. The Regulation has also reduced the         
    minimum registered capital requirement for such type of finance           
    company from RMB300,000,000 (approximately HK$283,000,000) to             
    RMB100,000,000 (approximately HK$94,000,000). The Directors believe       
    that it would be beneficial for the Company to unlock the opportunity     
    arising from the Regulation in order to boost its financing               
    capability.