Final Results

TAIHUA PLC

("Taihua" or the "Company")

Annual Results for the Twelve months ended 31 December 2012

Chairman's Statement

Having made the decision to change the strategic direction of the Company from Active Pharmaceutical Ingredients (APIs) to Traditional Chinese Medicines (TCMs) this was a transitional year as we build up our forsythia plantations and our Paclitaxel and Homoharringtonine sales fell.

Segmental Sales Analysis

Forsythia

The second harvest from our first plantation was completely sold before the end of 2012. Tonnage was comparable with 2011 : 940 tonnes in 2012 and 986 tonnes in 2011. The average selling price in 2012 was RMB 29.8/kg excluding sales tax which was similar to 2011. It is the Board's understanding that this price has been maintained in the wholesale market in 2013.

The second plantation was handed over to Taihua before the end of December 2012. It is slightly larger than the first plantation. The acquisition of this plantation completes Taihua's acquisitions of forsythia-based assets.

China has experienced a period of significant inflation and this was reflected in increases in the costs of managing and harvesting the plantation. However, China's inflation rate has reduced recently (Jan-Apr 2013 avg 2.4%; Jan-Apr 2012 avg 3.7%) so the Board hopes that inflationary pressures on plantation costs will subside.

Finished Product TCMs

Bian Tong Pian sales were RMB 4.4m (2011: RMB 8.3m) but this was heavily influenced by a reduced price to our distributor, largely offset by a reduction in sales commissions paid. The actual volume reduction was about 25%.

Bian Tong Pian is distributed in Beijing metropolitan district and Guangzhou military hospitals. It is also approved for sale in five further provinces and we have applied for approval in a further five provinces. In provinces where we have approval to sell but, as yet, no distribution agreements, prospective distributors are taking small quantities to test the market.

Two products, Geng Nian An Capsule (dealing with menopause) and Zao Ren AN Shen Keli (dealing with insomnia), in our existing TCM range have also been identified as suitable for broader distribution. Both of them were listed into the National Essential Drugs Catalogue for the first time in May 2013. The National Essential Drugs Catalogue issued by the Ministry of Health of China is the basis on which the medical institutes in China are obliged to purchase drugs for their patients' use. The patients who are prescribed drugs in the National Essential Drugs Catalogue are entitled to recover the costs from the medical insurance providers in China.

APIs

The supply of Paclitaxel API is increasingly competitive and as a result the average selling price has fallen significantly. Sales were approximately 6kg in 2012.

There was a Yew tree harvest of 18 tonnes in 2013 which is enough raw material for approximately 5.4kg of finished product. It is anticipated that the annual harvest will be 15-20 tonnes per annum. It is expected by the Board that this will make Taihua largely self-sufficient in the supply of raw material

Homoharringtonine sales have fallen due to the government's delay in reaccrediting Taihua's customers. We currently have no information regarding when this reaccreditation process will commence.

Balance Sheet

Cash fell from RMB 63m to RMB 39m. The company paid RMB 33m in respect of the second forsythia plantation during the period. Operating cashflow was positive RMB 9.9m

The Board of Directors would like to place on record their appreciation of investors' interest in Taihua. Whilst the transition from API-focussed to TCM-focussed business is slower than we would like we believe that this transition was necessary. In the past two years we have spent RMB 59m on TCM assets and we will spend more as and when suitable targets are identified.

Annual General Meeting/Dispatch of Report and Accounts

The Company intends to hold its Annual General Meeting at at 11am on 9th July 2013 at the Company's registered offices at DWP LLP, 4th Floor, Capital House, 85 King William Street, London, EC4N 7BL. Copies of its annual report and accounts will be dispatched to shareholders on 14 June 2013 and will be available from the Company's website (www.taihplc.com) from that time.

For more information please contact:

Nicholas Lyth, Taihua plc

+44 (0) 776 990 6686

Katy Mitchell, WH Ireland Limited

+44 (0) 161 832 2174

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2012

CONSOLIDATED STATEMENT OF FINANCIAL POSITIION

AS AT 31 DECEMBER 2012

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2012

TAIHUA PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2012

TAIHUA PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2012

1. GENERAL INFORMATION

Taihua Plc (the "Company") was incorporated and registered in England and Wales on 29 August 2006 under the Companies Act 1985 as a public company limited by shares with the name "China Natural plc" with registered number 05918155. On 8 September 2006, the Company changed its name to "Taihua plc". The address of the registered office is 4th Floor, Capital House, 85 King William Street, London, EC4N 7BL, and the principal place of business is Room 201, Unit 3, No. 16 Zhong Hua, ShiJiCheng, FuZeYuan, 239 KeJi Road, Hi-tech Zone, Xi An, 710077, People's Republic of China (the "PRC").

The Company is an investment holding company and its subsidiaries are principally engaged in the manufacturing and sales of pharmaceutical products. The consolidated financial statements are presented in Renminbi ("RMB"), the currency of the primary economic environment in which the trading company operates.

2. Basis of preparation

(a) Compliance with International Financial Reporting Standards

The consolidated financial statements of the Company and its subsidiaries undertakings (the "Group") and the individual financial statements of the Company have been prepared in accordance with those International Financial Reporting Standards and Interpretations in force ("IFRSs"), as adopted by the European Union, and those parts of the Companies Act 2006 applicable to companies preparing financial statements under IFRSs.

The preparation of these financial statements in conformity with IFRSs also requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement and complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4 "Critical accounting estimates and judgements".

(b) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and all of its subsidiary undertakings as at 31 December 2012 using the acquisition method of accounting. The results of subsidiary undertakings acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

The acquisition of China Natural Pharmaceutical Limited ("CNP") by the Company on 26 September 2006 has been accounted for as a reverse acquisition in accordance with IFRS 3 "Business Combinations".

The Company became the legal parent of CNP by way of share exchange agreement. According to the share exchange agreement, the shareholders of CNP transferred the entire issued share capital of CNP to the Company in consideration for 73,390,800 ordinary shares of GBP 0.01 each. This business combination is regarded as a reverse acquisition whereby CNP, the legal subsidiary, is the acquirer and has the power to govern the financial and operating policies of the legal parent so as to obtain benefits from its activities.

(c) Initial application of new and revised IFRSs

In the current year, the Group initially applied the following IFRSs issued by the International Accounting Standard Board:-

Amendmentsto IFRS 7 Disclosures - Transfers of Financial Assets

Amendments to IAS 12  Recovery of Underlying Assets

The initial application of these International Financial Reporting Standards does not necessitate material changes in the Group's accounting policies or retrospective adjustments of the comparatives presented.

(d) IFRSs in issue but not yet effective

The Group has not early adopted the following new and revised IFRSs that have been issued but are not yet effective :-

IAS 19 (2011) Employee Benefits

IAS 27 Separate Financial Statements

IAS 28 Investments in Associates and Joint Ventures

IFRS 9 Financial Instruments

IFRS 10 Consolidated Financial Statements

IFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interests in Other Entities

IFRS 13 Fair Value Measurement

IFRIC20 Stripping Costs in the Production Phase of a Surface Mine

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities

Amendmentsto IFRS 7 Disclosures - Offsetting Financial Assets and Financial

Liabilities

Amendmentsto IFRS 10 Investment Entities

Annual improvements to Amendments to IAS 1, IAS 16 and IAS 32

IFRSs (2009 - 2011)

The Group is required to initially apply these IFRSs in its annual consolidated financial statements beginning on 1 January 2013, except that the Group is required to initially apply amendments to IAS 32 and IFRS 10 in its annual consolidated financial statements beginning on 1 January 2014 and IFRS 9 in its annual consolidated financial statements beginning on 1 January 2015.

The Group is in the process of making an assessment of what the impact of these amendments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the Group's consolidated financial statements.

3. EARNINGS PER SHARE

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

Diluted earnings per share

The Company has only one category of dilutive potential shares - share options. A calculation is done to determine the number of shares that could have been acquired at fair value based on the monetary value of the subscription rights attached to outstanding share options. It is compared with the number of shares that would have been issued assuming the exercise of the share options.

As set out in note 4 the profit for the year ended 31 December 2011 has been restated as a result of the adjustment to revenue to reflect the 180 day credit period granted to customers. The effect of this prior year adjustment is as follows :-

4. PRIOR PERIOD ADJUSTMENT

In reviewing the measurement of revenue given the high seasonality of sales and the collection of trade receivables the directors consider that revenue should be adjusted to reflect the 180 day credit period granted to customers and a prior period adjustment has been made accordingly.

The change in policy has been applied retrospectively by restating the balances as at 1 Jaunary 2011 and 31 December 2011 with consequential adjustments to comparatives for the year ended 31 December 2011 as follows :-

As a result of this change in accounting policy, turnover of the Group for the year ended 31 December 2012 is RMB1,083,000 lower and other revenue of the Group for the year ended 31 December 2012 is RMB377,000 higher than it would have been if the policy had not been changed.