Clarification of Forsythia Market Pricing

Taihua plc

("Taihua" or the "Company")

Clarification of Forsythia Market Pricing

The Company notes the recent bulletin board speculation concerning the wholesale prices obtained for the Forsythia crop. The Company would like to clarify as follows:

There are two stages in the marketing of Forsythia. The initial stage is the sale of "unprocessed" Forsythia, which is the product sold by Taihua. The second stage is the sale of "processed" Forsythia which is sold by Taihua's customers. The difference between the "unprocessed" and "processed" Forsythia is that the processed Forsythia is subject to further selection, processing, drying and packaging.

There are websites available which track the wholesale processed Forsythia price and these have shown a significant upturn in pricing during 2013 against the pricing in 2012. The directors are not aware of any websites which currently track the price of unprocessed Forsythia.

The pricing of unprocessed Forsythia has not followed the upturn in the price of processed Forsythia. The directors believe that a key reason for this is that Taihua's Forsythia customers have incurred a one-off GMP compliance cost in 2013. Prior to 2013 they could sell processed Forsythia without GMP certification but this was not the case from 2013. As a result, the directors believe they have sought to pass on some of the costs to the suppliers of unprocessed Forsythia. This has resulted in the 2013 price for unprocessed Forsythia remaining stable in comparison with 2012 pricing.

The Company confirms that, as its crop is the "unprocessed" Forsythia, the price per kilogramme in Luonan County where Taihua's plantations are located is around RMB28 excluding tax, as opposed to the price for "processed" Forsythia, for which the price on the pharmaceutical wholesale markets is around RMB38 to RMB45 per kilogramme excluding tax.

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