AGM Statement

Taihua plc

("Taihua" or the "Company") 

Annual General Meeting Statement

At the Annual General Meeting of the Company, to be held later today, Nicholas Lyth, the Chairman of the Company, will give the following statement:

"I am pleased to present the following update as to Taihua's activities in the year to date:

Traditional Chinese Medicines

As has previously been announced the Company sees considerable potential in the Traditional Chinese Medicine sector, positioning itself as both a supplier of raw materials and also as a supplier of finished goods. The Board is currently looking for further suitable products to complement the Company's existing portfolio, and further announcements will be made if new products are acquired.

Bian Tong Pian

Sales in the first five months of the year for Bian Tong Pian were behind the same period last year. The directors believe this is largely due to its distributor overstocking towards the end of 2011 in order to meet annual sales targets. However, given that the Company is now authorised to distribute this product into four new provinces, the Board anticipates that total 2012 sales will exceed total 2011 sales.

Forsythia

The Company continues to hold the leases for two Forsythia plantations and the final negotiations regarding the handover of the management of the second plantation is nearing completion. The reason for the delay, which does not affect the Company's rights to the harvest, was as a result of a re-negotiation of lower pricing for matters such as harvesting costs.

Active Pharmaceutical Ingredients (APIs)

The Active Pharmaceutical Ingredient ("API") sector continues to be very competitive. The directors believe there is surplus supply chasing diminishing demand.

Homoharringtonine sales have fallen considerably in the first five months of this year in comparison with the same period last year. However, it is in the opinion of the Board that this is due to the slow rate of recertification of the Company's customers by local regulatory agents. The Board believes that the Company maintains a strong market share in the supply of the API and as such is well placed once the recertification process has been completed. In the meantime, the Board believe that demand for finished product Homoharringtonine is being met from existing finished goods inventory.

Paclitaxel sales have similarly fallen in the same period as the market price for the natural product has fallen, which directors believe is due to competition from semi-synthetic suppliers. However, the Yew tree plantation, which is expected to have its maiden harvest this year, should be a source of both cheaper raw materials and also two potentially lucrative by-products from the production process. These two new developments will, in the opinion of the Board, enable the Company to continue to supply profitable natural Paclitaxel.

Notwithstanding the above, the Company has decided, in the light of the current competitive market conditions and the costs associated with the regulatory process, to postpone its entry into the European market for Pacliataxel. Accordingly the directors have postponed the process for reapplying for its Certificate of Suitability ("COS") for Pacliataxel. Should market conditions improve then this decision will be revisited. Going forward, it is the opinion of the directors, that Traditional Chinese Medicines will begin to contribute a increasing proportion of overall revenue.

For more information please contact: