Chinese nonwovens specialist Winner Medical Group has reported
financial results for the second quarter of fiscal year 2008 ended March 31. Total net sales revenue grew 18% over the second quarter of fiscal 2007 to $17.9 million. Gross profit increased 17% over the second quarter of fiscal 2007 to $3.95 million.

Strong revenue performance was driven by broad-based sales in all regions, particularly in Europe, and an increase in both the number and size of orders from existing customers due to a strong demand environment and price increases across the majority of product lines. Sales revenue from European customers was $8 million for
this three-month period, an increase of 52.7% compared to the same period last year. Europe accounted for 45.2% of second quarter total revenue.

For the second quarter of fiscal 2008, net income decreased
by 52% to $570,000 compared to net income of $1.2 million for the second quarter of last fiscal year. The decrease in net income is mainly attributable to the fixed expenses related to commencement of trial production of PurCotton in the new Winner Huanggang factory.

In its medical care, wound care and home care product segments, sales revenue and gross profit increased by approximately 16% and 21%, to approximately $17.6 million and $4.08 million, respectively, due to strong demand. Gross margin increased to approximately 23% in the second quarter of fiscal 2008 from 22% in the second quarter of fiscal 2007. The company successfully implemented
price increases across the majority of its product lines, offsetting the RMB appreciation impact on operating costs.

Jianquan Li, chairman and CEO of Winner Medical, commented, “I am pleased to announce another quarter of strong top-line growth driven by sales growth of our traditional products, including medical care, wound care and home care products, particularly in Europe.”

“As a result of RMB appreciation against the U.S. dollar, and the high inflation rates in China during the quarter, our costs and expenses increased as a proportion of total revenue. However, our successful implementation of price increases across the majority of our products has partly offset the impact of the exchange rate changes. In addition, we have put in place measures to reduce costs and expenses through production improvements designed to create leaner production lines, which will help to eliminate manufacturing waste and increase efficiency.”

Chairman Li continued, “We have made significant progress in PurCotton Products development. We have commenced trial production of PurCotton products for customers in Japan and the U.S. and are looking forward to a gradual increase in sales orders in 2008. We are also dedicated to building a strong domestic distribution network in China. We have appointed a regional distributor to sell PurCotton Products in selected provinces
in China while we continue to sell and promote Winner brand products through OTC drugstore chains, local distributors and hospitals.”