Weiqiao Textile has warned that it expects group results for the year ending 31 December 2011 to be substantially lower than that for the corresponding period in 2010, adding that it can still expect a profit.

Core business may record a loss due to impairment provision made for the inventory based on the accounting principle of prudence and relevant accounting standard. Such provision is a non-cash item, and does not have an impact on the group's cash flow, the company said.

The group's annual results for the year ending 31 December 2011 are expected to be published before the end of March 2012.

The group's profit substantially reduced as a result of the remarkable price decline of cotton textiles products, as the demand in cotton textiles market in China have become gloomy in light of the significant reduction in the cotton prices during the year, the company said.

The inventory of the group for the period ended 30 November 2011 has increased slightly compared with that of the first half of 2011, which was attributable to the continuing downturn in demand of cotton textiles market. Influenced by the significant reduction in the product prices, pursuant to the accounting principle of prudence and relevant accounting standard, the group will make impairment provision for the existing inventory, which will more negatively affect the overall profitability of the group and may result in the anticipated loss of the group's core business.

The board considers that the overall operations of the group remain sound and intact. It is expected that product sales in the second half of this year will maintain stable compared with the first half of the year, and the financial position of the group remains solid, the company said.