Trading Update

Taihua plc

("Taihua" or the "Company")

 TRADING UPDATE

Taihua is a China-based pharmaceutical company specialising in the cultivation of Traditional Chinese Medicine ("TCM") raw materials, manufacture of TCM and certain Active Pharmaceutical Ingredients

Taihua would like to update its shareholders on its progress in 2014 before the release of its financial results for the financial year ended 31 December 2014

Sales

Total Sales for 2014 were RMB 53.1m (2013: RMB 52.3m) 

Forsythia

The combined harvest of the two plantations was 1,145 tonnes (2013: 1528.6 tonnes). The reduction was primarily due to adverse weather conditions in the Winter and Spring periods. However, other suppliers suffered similarly and the shortfall in supply increased the wholesale prices.

In 2014 the average selling price was RMB37.77/kg (2013: RMB28.31/kg) excluding sales tax.

As a result the overall revenue derived from Forsythia was unaffected by the reduced harvest (2014: RMB 43.27m)

The entire harvest has been sold

Traditional Chinese Medicines

Bian Tong Pian continues to generate the majority of the sales in this sector and the Board are seeking to extend its distribution.

Active Pharmaceutical Ingredients (APIs)

For some time the profitability of Paclitaxel has reduced. In 2014 it was loss-making at a Gross Margin level as by-products had not been successfully sold. The Board have decided that Taihua will cease production of Paclitaxel for an initial period of 6 months with immediate effect. After this period the Board will assess what impact our withdrawal from production has had on the Chinese wholesale price and will then make a further decision as to Paclitaxel's future.

Homoharringtonine sales in 2014 continued at the low level experienced in recent years. However, this product has historically been of considerable importance to Taihua due to its volume and margin so Taihua will continue to produce this Active Pharmaceutical Ingredient in the expectation of a return to earlier market conditions.

Outlook

It is encouraging that the increase in wholesale price of forsythia has compensated for the reduced harvest. Taihua is working with agronomists to seek to identify ways to enhance the harvest from our plantations.

The Company's Balance Sheet remains strong despite more difficult trading in the past years. The cash balance at the end of the year was RMB 46.58m. 

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