24th Jul 2009 08:57
Taihua plc
("Taihua" or the "Company")
AGM Statement
At the Annual General Meeting, to be held later today, the Chairman, Richard Tanner, will make the following statement and trading update:
Overview
The difficulties faced by the Company in 2008 continued into 2009, with foreign exchange rate fluctuations and further decreases in the sales volume and the price of Paclitaxel and Homoharringtonine continuing to put pressure on results. Consequently, the sales revenue and profit before tax of the Company in Renminbi for the first six months of 2009 continued to fall significantly below the Board's expectations.
As set out in the Trading Update, dated 18 February 2009, due to the current economic difficulties, some of Taihua's customers continue to ask the Company to vary the terms and conditions (through extension) of their credit period and the Company seeks to monitor the risk of recovery from customers through refusing orders from what are perceived to be unacceptably high risk customers - this included the proposed customers in Korea. In addition, as an incentive to continue to maintain cash flow, Taihua offered discounts for cash-on-delivery payment terms which proved helpful with some customers. These combined factors continued to have an adverse impact on the Company's sales and profitability.
However, as at June 2009 sales of Taihua's product lines were starting to rise again and there has been increased interest from Taihua's customers in the Company's products, particularly as the Company has indicated it may relax some of the terms of its credit risk policy.
Finally, the board continues to believe that the introduction of semi-synthetic paclitaxel is less of a competitive threat than previously anticipated following what the directors perceive to be an increasing trend for customers to prefer natural ingredients rather than synthetic products.
Board Review
The Company continues to seek a third non-executive director with relevant pharmaceutical experience, following the resignation of Mike Wyllie in 2008. To date, the right candidate has not been identified but this continues to be a priority for the board of directors.
Dividend
The Company continues to liaise with its regulators and bankers, with a view to ensuring sufficient funds are available for transfer from the Company's Chinese trading subsidiary (Taihua Natural Pharmaceutical Limited) to Taihua plc, in order that the dividend referred to in the Chairman's Statement for the accounts ended 31 December 2007 can be paid. For the avoidance of doubt, any dividend paid would be treated, for accounting purposes, as a dividend arising in the financial year in which it is paid. In this instance it is likely to be payable in 2009 and a further announcement will be made in due course.
No further dividend is proposed as the Company continues to conserve its cash in the current climate which is currently approximately RMB85,000,000. However, the Company is investigating potential acquisition and expansion opportunities. These opportunities are early stage, but if they are to progress then further information will be provided to the market in due course.
EDQM
Further to the announcement of 18 May 2009, the Company continues to await news from the European Directorate for the Quality of Medicines as to the update on its application for Certificate of Suitability for paclitaxel. There is nothing the board can do to accelerate the application process, but the board will update the market as soon as more information is available.
At the present time, the Company is not progressing its application into the US market.
Finally, I would like to thank the board, our employees, our advisers and our shareholders for their ongoing support in Taihua.
Richard Tanner
Chairman
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For more information please contact: |
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Richard Tanner, Director, Taihua plc |
+852 2573 5000 |
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Katy Mitchell, WH Ireland Limited |
+44 161 832 2174 |
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