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Winner Medical Reports First Quarter Fiscal 2009 Results
Date:2/13/2009

SHENZHEN, China, Feb. 13 /PRNewswire-Asia/ -- Winner Medical Group Inc. (OTC Bulletin Board: WMDG) (''Winner Medical'', or the ''Company''), today reported unaudited financial results for the first quarter ended December 31, 2008. The Company's results are detailed in its form 10-Q, filed today with the United States Securities and Exchange Commission.

    First Quarter 2009 Highlights
    -- Total net sales revenue increased by 33.14% over the first quarter of
       fiscal 2008 to $25.73 million
    -- Gross profit increased by 37.56% over the first quarter of fiscal 2008
       to $6.60 million
    -- Operating income increased by 37.73% over the first quarter of fiscal
       2008 to $1.74 million
    -- Net income increased by 26.94% over the first quarter of fiscal 2008 to
       $1.48 million
    -- Net income per share for the first quarter of 2009 was $0.03 per basic
       and diluted share, compared to $0.03 per basic and diluted share for
       the first quarter of fiscal 2008

Jianquan Li, Chairman and Chief Executive Officer of Winner Medical, commented, ''we are pleased to announce another quarter of strong sales growth, driven by increased orders of our traditional products, including medical care, wound care and home care products, particularly from customers in the US and Europe. Despite the negative effect of the appreciation of the RMB and the global economic crisis, we are able to maintain a stable gross margin and net margin through implementing cost control measures and equipment technical improvements that optimize production efficiency.''

Mr. Li continued, ''Our PurCotton(TM) products performed solidly, with total sales of $0.84 million in the first quarter of fiscal 2009. We will further strengthen marketing efforts for PurCotton(TM) and we believe the growing sales of this new product will be a complementary growth driver to our traditional products over the mid- to long-term.

First Quarter 2009 Unaudited Financial Results

Revenue: Winner Medical reported net sales revenue of $25.73 million, a 33.14% increase over the first quarter of fiscal 2008. Healthy revenue growth was mainly due to strong demand, particularly in North and South America; revenue from North and South America was approximately $4.96 million for the first quarter of fiscal 2009, an increase of 105.94% compared to the same period in 2008. The North and South American market accounted for 19.28% of total revenue for the quarter ended December 31, 2008.

Gross Profit: For the first quarter of fiscal 2009, gross profit was $6.60 million, an increase of 37.56% over $4.80 million in the same period of fiscal 2008. Gross margin was 25.66%, versus 24.84% achieved in the first quarter of fiscal 2008. The increase in gross margin was mainly due to the unit product cost decrease as a result of better economies of scale, and the improvement of our cost control, equipment technical improvement and lean production management that increased production efficiency and reduced production waste.

Operating Expenses: Selling, general and administrative expenses increased by 24.41% to $4.46 million in the first quarter of fiscal 2009, from $3.58 million in the first quarter of fiscal 2008. During this quarter, the increase in the operating expenses was mainly due to the increased provision for decline in value of inventory, increase in salary and welfare for the management and administrative staff, and the increase in related administrative expenses such as depreciation and amortization for Winner Medical (Huanggang) Co., Ltd.

Operating Income: During the period, operating income was $1.75 million, an increase of 37.73% compared with $1.27 million in the same quarter of 2008. The increase was mainly attributed to decreased export transportation fees, economies of scale related to higher sales revenue, and improved production management to reduce manufacture cost.

Income Taxes: The income tax provision for the first quarter of fiscal 2009 was $260,000, up from $65,000 for the same period in fiscal 2008. The increase in tax provision was mainly due to a change in tax rate for our subsidiaries in China as a result of the Chinese Income Tax reform that came into effect on January 1, 2008.

Net income: Net income increased by 26.94% to $1.48 million, or $0.03 per basic and diluted share, compared to net income of $1.16 million, or $0.03 per basic and diluted share, for the first quarter of last fiscal year. This increase can be attributed to higher sales revenue during the three months ended December 31, 2008 as compared with the same period last year, the decrease in transportation expenses, and improved production management to reduce manufacture cost.

Balance Sheet

Cash and cash equivalents as of December 31, 2008 were approximately $7.73 million; compared with $6.46 million as of September 30, 2008. The Company's working capital as of December 31, 2008 was $14.88 million compared with $12.37 million as of September 30, 2008. Net operating cash flow during three months ended December 31, 2008 was $1.63 million, an increase of $4.01 million compared with the same period in fiscal 2008.

First Quarter 2009 Operational Highlights

Medical care, Wound care and Home care products in Export Markets

North and South America - Revenue from customers in North and South America was approximately $4.96 million for the three months ended December 31, 2008, an increase of 105.94% compared to the same period last year. North and South America accounted for 19.28% of total revenue for the three months ended December 31, 2008. The Company has been gradually shifting resources and services to focus on the larger-sized customer segment and successfully attained a higher order volume from existing customers, especially in the United States. As a result, it expects revenue from these larger customers to increase in the future.

Europe - Revenue from European customers was approximately $11.10 million for the first quarter of fiscal 2009, an increase of 24.57% compared to the same period last year. Europe accounted for 43.15% of total revenue for the first quarter of fiscal 2009, respectively. The Company has adopted the same strategy in Europe as it has in the North and South America: gradually shifting resources and services to focus on the larger-sized customer segment. As a result, it expects revenue from these larger customers to increase in the future.

Medical care, Wound care and Home care products in China

Winner Medical has gradually refined its domestic sales strategies by reducing raw material sales in China and expanding sales of finished products in the domestic market. As a result, sales revenue from China was $2.6 million for the three months ended December 31, 2008, against $2.62 million in the same period last year.

PurCotton(TM):

In the first quarter of fiscal 2009, PurCotton(TM) sales of the Company grew steadily. The Company has $843,000 in raw material sales in the first quarter of fiscal 2009, which was mainly to customers in Japan, the U.S., and China. At the same time, the Company is in the stage of processing small scale trial orders of PurCotton(TM) finished medical products, such as operation room towel and sponges, with customers in North America and Europe.

During the quarter, Winner Medical obtained the patent for PurCotton(TM) in the European Patent Office and has now obtained patents for PurCotton(TM) products in countries including China, the U.S., Russia, Singapore, South Africa, and 34 Member states of the European Patent Office.

Winner Medical believes that demand for PurCotton(TM) will grow steadily. While it will be necessary to build education levels and cultivate interest in the short term, Winner Medical is confident in its mid- to long-term growth potential and steady progress has been made to expand the sales revenue.

Conference Call

Winner Medical senior management will host a conference call at 5am (Pacific)/ 8am (Eastern)/ 9pm (Shenzhen/ Hong Kong) on Monday, February 16, 2009 to discuss its 2008/09 first quarter results and recent business developments. The conference call can be accessed by calling +1-866-202-3048 (US), +86-10-800-130-0399 (South China), +86-10-800-152-1490 (North China), or +852-800-96-3844 (HK); Passcode: 98226179. A telephone replay will be available shortly after the conclusion of the call and will be accessible through February 23, 2009 by calling +1-888-286-8010 (US) or +1-617-801-6888 (International); Passcode: 58334143.

About Winner Medical

Winner Medical is a leading manufacturer in the medical dressing industry (medical and wound care products) in China. Headquartered in Shenzhen, the Company has eight wholly-owned manufacturing and distribution facilities, four joint-venture factories and over 5,000 employees. The Company engages in the manufacture, sale, research, and development of medical care products, wound care products, home care products and PurCotton(TM) products, a nonwoven fabric made from 100% natural cotton. The products are sold worldwide, with Europe, the U.S. and Japan serving as the top three markets. The Company currently holds 50 patents and patent applications in various products and manufacturing processes and is one of the few Chinese companies licensed with the U.S. Food and Drug Administration (FDA) to ship finished, sterilized products directly to the U.S. market. To learn more about Winner Medical, visit Winner Medical's web site http://www.winnermedical.com .

Forward-Looking Statements

This press release contains certain statements that may include "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding Winner Medical and its subsidiary companies' business strategy, plans and objective and statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although Winner Medical believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Winner Medical's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Winner Medical's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward- looking statements attributable to Winner Medical or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, Winner Medical does not assume a duty to update these forward-looking statements.

    Investor Relations Contacts:

     Peng Zhai
     Assistant Manager, Investor Relations
     Winner Medical Group Inc.
     Tel:   +86-755-2806-6858
     Email: peng.zhai@winnermedical.com



    Winner Medical Group Inc.
    Consolidated Statements of Income and Comprehensive Income

                                                      Three months ended
                                                          December 31
                                                     2008           2007
                                                  (Unaudited)    (Unaudited)
                                                      US$            US$

    Net sales                                      25,730,274    19,325,599

    Cost of sales                                 (19,126,878)  (14,526,018)
    Gross profit                                    6,603,396     4,799,581

    Other operating income, net                       484,964       365,082
    Exchange difference, net                         (885,012)     (313,531)
    Selling, general and
     administrative expenses                       (4,458,526)   (3,583,820)

    Income from operations                          1,744,822     1,267,312
    Interest income                                    12,516        10,478
    Interest expense                                 (208,409)     (100,659)
    Equity in earnings of 50 percent
     or less owned persons                             89,876        24,529
    Income before income taxes and
     minority interests                             1,638,805     1,201,660

    Income taxes                                     (260,128)      (64,857)
    Income before minority interests                1,378,677     1,136,803

    Minority interests                                 96,207        25,273
    Net income                                      1,474,884     1,162,076

    Other comprehensive income
     Foreign currency translation
      difference                                     (167,682)    1,671,875

    Comprehensive income                            1,307,202     2,833,951


    Net income per share
    - basic                                              0.03          0.03
    - diluted                                            0.03          0.03

    Weighted average common stock
     outstanding
    - basic                                        44,727,171    44,727,171
    - diluted                                      45,002,116    44,852,550




    Winner Medical Group Inc.
    Consolidated Balance Sheets

                                                  December 31   September 30
                                                     2008           2008
                                                  (Unaudited)    (Unaudited)
                                                      US$            US$
                                    ASSETS


    Current assets:
     Cash and cash equivalents                     7,734,831      6,462,505
     Restricted bank deposits                        127,759        126,749
     Accounts receivable, less
      allowances for doubtful
      accounts of US$75,656 and
      US$100,964 at December 31,
      2008 and September 30, 2008,
      respectively                                12,889,242     13,516,688
     Amounts due from affiliated
      companies                                      302,847        349,359
     Inventories                                  17,362,728     15,839,587
     Prepaid expenses and other
      current assets                               3,621,245      4,734,503
     Income taxes recoverable                         36,007         99,126
     Deferred tax assets                             224,291        207,798
          Total current assets                    42,298,950     41,336,315
    Property, plant and equipment, net            57,257,251     57,937,881
    Held-for-sale asset                                   --        607,423
    Investment in equity investees                 1,608,724      1,518,848
    Intangible assets, net                           121,444        126,141
    Prepaid expenses                                 220,774        233,203
    Deferred tax assets                              172,299        158,280
          Total assets                           101,679,442    101,918,091

                     LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
     Short-term bank loans                        14,338,805     15,033,073
     Accounts payable                              6,804,312      8,271,926
     Accrued payroll and employee
      benefits                                     2,050,860      1,891,410
     Customer deposits                               551,286        458,303
     Other accrued liabilities                     2,526,293      2,518,326
     Amounts due to affiliated
      companies                                      247,982        136,481
     Income taxes payable                            895,445        656,550
          Total current liabilities               27,414,983     28,966,069
    Deferred tax liabilities                          41,865         41,965
          Total liabilities                       27,456,848     29,008,034

    Commitments and contingencies

    Minority interests                                52,100        148,306

    Stockholders' equity:
    Common stock, par value $0.001
     per share; authorized 495,000,000,
     issued and  outstanding December 31,
     2008 - 44,727,171 shares; September 30,
     2008 - 44,727,171 shares                         44,727         44,727
    Additional paid-in capital                    30,944,868     30,843,327
    Retained earnings                             29,899,871     28,791,259
    Statutory reserves                             2,671,706      2,305,434
    Accumulated other
     comprehensive income                         10,609,322     10,777,004
          Total stockholders' equity              74,170,494     72,761,751
          Total liabilities and
           stockholders' equity                  101,679,442    101,918,091


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SOURCE Winner Medical Group Inc.
Copyright©2009 PR Newswire.
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