Georges White Limited By Share Ltd Special Announcement On Investment Risk Of Public Offerings

(hereinafter referred to as "issuers") the initial public offering of 24 million 650 thousand shares of RMB common stock (A shares) will be implemented on July 4, 2012 (T) through the electronic trading platform under the Shenzhen stock exchange trading system and the Internet.

The issuer and sponsor (the lead underwriter) specifically drew investors' attention to the following:

1, any decision or opinion made by the CSRC and other government departments on this issue does not indicate that it makes substantive judgments or guarantees on the investment value of the issuer's shares or the investors' earnings.

Any statement contrary to it is false and false.

2, investors who intend to participate in the purchase of this issue must carefully read the full text of the prospectus for the initial public offering of Zhejiang white clothing Limited by Share Ltd, published in 25 June 2012, and the full text of the prospectus issued by the prospectus, especially the chapters on "major issues" and "risk factors", fully understand the various risk factors of the issuer, carefully judge its business status and investment value, and make prudent investment decisions.

If the issuer is affected by the political, economic, trade and management level, the operating conditions may change, which may lead to the investment risk borne by the investors themselves.

3. No circulation restrictions and locking arrangements for the shares issued under this net are circulating from the date of the listing of the shares issued on the Shenzhen Stock Exchange.

Investors must pay attention to the investment risk caused by the increase in stock circulation on the first day of listing.

4, the issuer's industry is clothing and other fiber products manufacturing industry, China Securities Index Co released the industry average rolling price earnings ratio in the past month is 22.45 times (as of June 29, 2012), please refer to investors when making decisions.

The issue price of 23 yuan / share corresponds to the 2011 diluted earnings ratio of 24.73 times, which is higher than the average monthly rolling price earnings ratio of the industry in the latest month, 10.16%.

5, the amount of funds required by the issuer for this project is 380 million 500 thousand and 500 yuan.

According to the calculation of this issue, the estimated amount of fund-raising is 566 million 950 thousand yuan, which exceeds the amount required for the issuer's plan. The ratio exceeds 49%. There is a significant increase in the size of the net assets resulting from the collection of funds, which has a significant impact on the issuer's production and operation mode, operation and management and risk control capabilities, financial status, profitability and long-term interests of shareholders.

6, market risk

(1) the risk of fierce competition in the market

The tradition of our company

Enterprises are numerous, the trade barriers are low, and they are the full competition industry.

The company's main products are "Georges white" brand of business attire, men's wear and casual wear, and so on. There are many potential competitors in the market of professional wear, and the competition is fierce.

At present, YOUNGOR, newspaper bird, keno technology, Hinur, Shanshan, Kaiser, and Li Lang have been relying on the capital market to raise funds to expand their production scale. The pition from the formal brand to the production and operation of the professional clothing is relatively easy, and the potential market competition is fierce.

At the same time, more and more international brands enter China, occupy the high-end market, and gradually penetrate into the mid end market.

Garment enterprises have already competed in all aspects of quality, price, brand, scale, advertising, business mode and commodity channel.

Compared with the above companies, the company has a gap in overall sales scale and market share.

If the issuer can not improve the market share and competitiveness in a timely manner, and face more intense and complex market competition, the market share and profitability of products will be faced with a downward trend.

(2) macroeconomic risks and operational risks arising from major events.

To a large extent, the apparel industry depends on the sustained and stable development of global macroeconomic development.

If there is a sustained macro-economic fluctuation or other major events leading to a decline in market demand for clothing, the company's financial and business performance will be affected.

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7, business risk

(1) the risk of too concentrated product variety.

At present, the company is mainly engaged in the production and sale of professional clothing, and the main products are relatively concentrated.

In 2009, 2010 and 2011, the percentage of sales of professional wear accounted for 78.84%, 82.28% and 86.87% of main business income respectively.

If the company's customer management situation worsens, the pfer of buyers, or the market to reduce the demand for professional clothing, the company has a risk of reducing sales revenue and profit.

(2) the risk of seasonal fluctuation in product sales

As the enterprises and institutions are generally concentrated in the second half of the year, the price of clothing in different seasons has great differences, so the sales of the professional clothing industry has a certain seasonal regularity.

During the reporting period, the proportion of professional wear business income that the company realized in 2009, 2010 and the second half of 2011 accounted for 72.71%, 65.41% and 57.52% of the total revenue of the year respectively.

The seasonal fluctuation of the sales of the main products of the company also results in some seasonal characteristics of the company's production, operation and sales, which may adversely affect the stability of the company's business performance and cash flow.

(3) the risk of larger inventory balance

During the reporting period, the stock balance of the company increased year by year, and the share of the stock in current assets increased year by year.

At the end of the reporting period, the main composition and turnover of the company's inventory are as follows:

project

2011.12.31

2010.12.31

2009.12.31

Inventory balance (10000 yuan)

Fifteen thousand three hundred and seventeen point six seven

Eleven thousand seven hundred and ten point eight three

Seven thousand three hundred and thirteen point three seven

Among them: raw materials (10000 yuan)

Three thousand seven hundred and ninety-seven point nine one

Three thousand and fifty-five point eight zero

One thousand eight hundred and thirty-two point six eight

Goods in stock (10000 yuan)

Ten thousand three hundred and twenty-five point five five

Seven thousand and forty-three point five one

Four thousand three hundred and fifty-two point nine three

Net Inventory ($10000)

Twelve thousand eight hundred and thirty-three Point Four Zero

Nine thousand five hundred and nine point zero eight

Five thousand and seven hundred point seven three

Net stock accounts for the proportion of current assets.

40.88%

33.62%

30.13%

Annual inventory turnover (Times)

Two point eight three

Two point seven four

Two point nine nine

The company's stock is formed in the normal production and operation process. During the reporting period, the company's stock balance has increased year by year, occupying more working capital of the company. In the future, if the market environment of the company is experiencing adverse changes or competition intensifies, it may lead to stock prices and other stock prices or realizable difficulties, which will adversely affect the performance of the issuer.

(4) the risks associated with the management of agents and franchisees.

The company's sales of professional wear are based on direct sales of professional clothing marketing centers, and sales of agents are subsidiary. The retail monopoly market adopts direct sales and franchise stores.

As of December 31, 2011, the company has set up 13 direct marketing centers and 48 Direct stores in 25 provinces, autonomous regions and municipalities directly under the central government, and has introduced 6 agents and 156 franchisees.

The company signs an agency contract and a franchise contract with agents and franchisees respectively, and conducts specifications for agents and franchisees.

But agents and franchisees are only controlled by the company in their business. People, money and goods are independent of the company. The business plan is also determined according to their business objectives and risk preferences.

If the management level of the company can not keep pace with the continuous increase of the number of agents and franchisees, or the operation of some agents and franchisees is contrary to the brand management purposes of the company, it will adversely affect the brand image and future development of the company.

(5) human resources risk

The company's industry belongs to the labor-intensive industry, and the continuous supply of labor is very important.

The sustainable development of a company depends on the cooperation of various departments, such as design, procurement, production, sales and so on. With the continuous expansion of the company's business scale, the demand for labor is gradually increasing, and there is a risk that the labor force can not be placed in time or unskillfully, which will adversely affect the operation of the company.

(6) the risk of rising human resources costs.

During the reporting period, the wage level of all types of employees increased year by year, especially in 2011. This is the need for the rapid development of the main business of the company. On the other hand, it is also caused by the continuous rise in labor costs in the eastern part of China.

If the main business of the company can not maintain sustained growth in the future, the level of profitability can not be maintained steadily.

Adverse effects.

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8, financial risk

(1) risk of changes in tax preferences

According to the provisions of the seventh and eighth articles of the People's Republic of China foreign investment enterprise and foreign enterprises income tax law (effective from July 1, 1991 and abolished in January 1, 2008), the company has enjoyed preferential policies of "two exemption from three and half reduction" since July 1, 1991.

According to the provisions of the People's Republic of China enterprise income tax law (January 1, 2008) and the State Council Circular on the implementation of the preferential tax policy on enterprise income tax ([2007]39), the company will be exempted from enterprise income tax in 2007 and 2008, and the enterprise income tax will be paid in 2009, 2010 and 2011 in accordance with the 12.5% tax rate cut by half.

From 2012 onwards, the company will no longer enjoy the above tax preferences, will have a certain impact on the company's net profit.

(2) accounts receivable risk

At the end of the reporting period, the account receivable value of issuers was 83 million 31 thousand and 900 yuan, 120 million 745 thousand and 500 yuan and 111 million 832 thousand and 500 yuan respectively, and accounts receivable was large. The specific data are as follows:

project

2011-12-31

2010-12-31

2009-12-31

Net accounts receivable (10000 yuan)

Eleven thousand one hundred and eighty-three point two five

Twelve thousand and seventy-four point five five

Eight thousand three hundred and three point one nine

Proportion of current assets

35.62%

42.69%

43.88%

Proportion of total assets

18.20%

24.47%

22.73%

With the continuous development of the company's business and expansion of the scale, if the debtor's financial operation is deteriorating, there is a risk that accounts receivable can not be collected on time or unable to be recovered, which will adversely affect the issuer's production and business performance.

(3) the risk of substantial changes in advertising costs

In the 2009-2011 years, the advertising expenses of the company were 11 million 795 thousand and 200 yuan, 13 million 810 thousand and 300 yuan and 15 million 751 thousand and 800 yuan respectively, and the growth was relatively stable.

The overall cost of Future Ltd advertising will be planned according to about 3% of sales revenue, so that advertising expenses will match the growth of operating revenue.

If the market competition of the future professional wear market is further intensified, the company may adjust its advertising strategy according to the needs of brand promotion, marketing network layout and actual operation, resulting in an increase in the proportion of advertising expenses to sales revenue. If advertising expenses increase significantly and advertising fails to achieve the desired effect, it may have adverse effects on the company's operating performance and net profit.

9, the risk of raising capital investment projects

(1) organization and implementation risks of recruitment and investment projects

The fund-raising fund will be invested in the following four projects: "marketing network construction project", "annual production of 200 thousand suits, 1 million high-grade shirts production", "design and research center construction project" and "information construction project".

In the process of implementation of the above projects, we do not exclude the investment risks caused by macroeconomic risks, market environment, management capabilities and other unexpected factors that affect the implementation process of the project, thus raising the risk that the investment projects can not achieve the expected return.

(2) management risks of marketing network construction projects

The issuer expects to use 267 million 850 thousand and 500 yuan of the total raised funds for the construction of the marketing network, which will account for 70.39% of the total investment.

The project specifically includes the construction of a professional clothing marketing center and 7 direct image stores in the 12 main cities of the country.

After the implementation of the project, the business scale of the company will further expand, and the existing management system and operation system of the company can not quickly adapt to the rapid development of the company's scale, thus causing the company to suffer the risk of loss.

(3) the risk of declining net assets yield.

Before this issue, the weighted average return on assets of the company in 2009, 2010 and 2011 were 18.06%, 27.96% and 29.98% respectively.

After the success of this issue, the net assets of the company will increase substantially, and the implementation of the capital raising investment project needs a certain period of construction and reaching the date of production. The net profit of the company will not keep growing in the short term.

At the same time, the venture capital investment projects may be difficult to achieve the expected return due to market risks such as market demand and changes in the trend of popularity.

(4) the risk of investment in housing projects.

The total amount of the total amount raised is 187 million 140 thousand yuan for the purchase of the property of the marketing network project, and the 7 million 243 thousand and 100 yuan for the purchase of the land use right of the production project. In the normal year after the purchase is completed, the company will amortize the new property depreciation and the right to the use of land totaling 8 million 566 thousand and 200 yuan. After deducting the income tax of 25%, the impact on the company's net profit is 6 million 424 thousand and 600 yuan, accounting for 6.82% of the company's net profit in the 2011 year.

If the investment project can not achieve the expected benefits or the actual income has a significant decrease compared with the expected revenue, the new property depreciation and the amortization of the land use right may have adverse effects on the company's operating performance and net profit.

10, management risk

(1) risk of actual controller control

The actual control of the company is man-made pool fire, Chen Yongxia and Chen Liangren, among which Chi Fang burns and Chen Yongxia are husband and wife relations; Chen Liangren and Chen Yongxia are brother sister relations.

Chen Yongxia and Chen Liangren directly held 24.01% of the issuer's shares. Chi Fang, Chen Yongxia and Chen Liangren indirectly controlled 35.37% of the issuer's shares through Wenzhou Georges white. Therefore, Chi Fang, Chen Yongxia and Chen Liangren shared three of the issuer's 59.38% share in direct or indirect way, and the three parties signed a concerted action agreement.

Therefore, the company may have the risk that the actual controller can control the company's production and operation decisions, personnel appointment and removal, related party pactions and profit distribution by exercising voting rights or other means, and Chi Fang and Chen Yongxia as a senior management of the company directly participate in the company's management decisions, and there is the possibility of using the actual controller status to encroach on the interests of other shareholders or damage the interests of the company.

(2) risk of internal control effectiveness

At present, the company has established a relatively complete, reasonable and effective internal control system. If the internal control system can not be perfected with the development of the company, it may lead to the risk of insufficient internal control effectiveness.

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11, the next issue will be based on the Yaohao placement method. The number of each purchase must be 1 million 232 thousand and 500 or 12 million 325 thousand times the amount of the purchase, and the amount of each purchase should not exceed 12 million 325 thousand shares.

When the total amount of effective purchase under this network exceeds the number of issued under the net, the sponsor (the lead underwriter) will place the quota according to the corresponding purchase amount of the valid offer of the placing object, and each 1 million 232 thousand and 500 shares will be matched with a number, and will eventually shake out 10 numbers, and each number will be allocated 1 million 232 thousand and 500 shares.

If there is a shortage of online subscription, the number of sub issue will increase correspondingly. The sponsor (the lead underwriter) will increase the number of signed numbers under the network according to the scale of the callback. If there is a net return to the Internet, the number of issuing outlets will be reduced accordingly, and the sponsor (the lead underwriter) will reduce the number of balloting numbers under the network according to the scale of the callback.

Therefore, it is very important for investors to note that if the two-way callback mechanism is launched, the result will be different from the previous placing method.

12. In this issue, the leading underwriters independently recommended 17 institutional investors with high pricing power and long-term investment orientation to participate in the inquiry under the network.

The leading underwriters have drawn up strict recommendation standards and decision-making procedures, and the final list of institutional investors has been registered with the Securities Association of China.

The quotation of such investors will affect the issuing price. If investors do not recognize such investors and their quotations, they will not participate in the purchase.

13, this issue follows the principle of market pricing. In the initial inquiry stage, the issuers and sponsors (principal underwriters) will negotiate the determination of the issue price based on the preliminary inquiry results, taking into consideration the factors such as the issuer's fundamentals, industry, comparable company valuation level, market environment, demand for capital raising and underwriting risk.

Any investor who participates in the online purchase is deemed to have accepted the offer price. If the investor does not recognize the pricing method and the issue price, he suggests not to participate in the issue.

14, the issuer and sponsor (principal underwriter) will announce the valuation conclusions of the sponsor research report and the quotations of all the placing objects during the launch of the Zhejiang white dress Limited by Share Ltd's initial announcement and placing results announcement on July 6, 2012 (T+2).

The above data are only used to reflect truthfully the valuations of the sponsors (the lead underwriter) and the quotations of the stock placing objects, which do not constitute investment suggestions for the issuer and draw investors' attention.

15, investors must pay attention to investment risk.

In this issue, when the following situation occurs, the undersubscribed part is underwritten by the sponsor (the lead underwriter): the total amount of effective online purchase is less than the total amount of online distribution, and is still unable to fully subscribe to the net after being allocated back to the net; the number of effective purchases under the network is less than the final number issued under the net.

16, there may be a risk that the issue will fall below the issue price after listing. Regulators, issuers and sponsors will not be able to guarantee that they will not fall below the issue price after listing.

Investors should pay close attention to the risk factors contained in the pricing marketization, and know that stocks may fall below the issue price after listing, enhance risk awareness, strengthen the concept of value investment, and avoid blindly speculation.

17, all issuers' shares are tradable shares.

The limited sale period before this issue is related to the sale restriction and the selling period arrangement.

The above shares restricted sale arrangements are voluntary commitments made by relevant shareholders based on relevant laws and regulations based on the needs of the issuer and the stability of management.

18, the purchase of this issue, any stock placing object can only choose under the net or online way to purchase.

All participants who participate in the inquiry, purchase and placement of shares under the network are not allowed to participate in the online purchase; individual investors can only purchase a qualified account.

Any purchase which is contrary to the above provisions is invalid.

19, after the end of this issue, it is necessary to be approved by the exchange before it can be publicly traded on the stock exchange.

If it is not approved, the issue will not be listed, and the issuer will return it to the investor who participates in online purchase according to the issue price and the interest on bank interest in the same period.

20, the issuer and sponsor (principal underwriter) solemnly draw the attention of investors: investors should adhere to the concept of value investment to participate in the purchase of this issue. We hope to recognize the issuer's investment value and expect investors to share the growth outcome of the issuer to participate in the purchase. Any suspected issuer is a pure "money" investor and should avoid participating in the purchase.

21, the special announcement of this investment risk does not guarantee that all investment risks of the issue will be disclosed. It is suggested that investors fully understand the characteristics and risks of the securities market, rationally assess their own risk bearing capacity, and independently decide whether to participate in the purchase of this issue according to their own economic strength and investment experience.

Issuer: Zhejiang Georges white dress Limited by Share Ltd

Sponsor (principal underwriter): Huatai United Securities Co., Ltd.

July 3, 2012