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18 Feb 2009 12:23
TAIHUA PLC
("Taihua" or "the Company"),
TRADING UPDATE
Taihua plc a China-based pharmaceutical company which manufactures Paclitaxel, Homoharringtonine and Traditional Chinese Medicines ("TCM") would like to update its shareholders on its progress in 2008 before the release of its financial results for the 12 months ended 31 December 2008, which are expected to be published in June 2009.
Overview
2008 was a difficult year for the business of Taihua. Impacted by the global financial crisis and foreign exchange rate fluctuations, both the sales volume and the price of Paclitaxel and Homoharringtonine, the Company's principal products, have decreased substantially when compared to the same period in 2007. Consequently the sales revenue and profit before tax of the Company in Renminbi ("RMB") for 2008 are expected to be significantly below the Board's previous expectations.
Paclitaxel and Homoharringtonine
Paclitaxel and Homoharringtonine are the Company's principal products (the "Products"). During 2008, the Company sold 16,850 grams of Paclitaxel, a decrease of 16% compared to 2007, and 9,110 grams of Homoharringtonine, a decrease of 28% compared to 2007. The directors believe the decrease in sales volume of the Products in 2008 was principally due to the fact that the cash flow of the Company's existing customers was adversely affected by the limited supply of credit as a result of the "credit crunch" across the banking sector. As a result, more customers asked the Company to vary the terms and conditions to extend their credit period and provide more favourable terms. This inevitably increased the Company's risk of recovery from some customers. To effectively control this risk the Company refused some orders from, what it perceived to be, high risk customers during the year.
Finally, the Company sells the Products to Russia and South America. The foreign exchange rate fluctuations of these currencies further adversely impacted the price and sales volume of Taihua's Products in these regions.
TCM products
As previously announced, the suspension of TCM production resulted in the sales volume and sales revenue of TCM products decreasing significantly in 2008 compared to those in the same period in 2007.
Outlook
The trading volume for the period from 1 January 2009 to the date of this update was low. Traditionally, January to March is a quiet trading period for Taihua and it is therefore expected that trading volumes will increase from April 2009.
The Company is now concentrating on the research & development of new products, the improvement of its factory and plantation base and the reinforcement of its sales force in order to improve its trading performance in 2009.
For further information contact:
Richard Tanner, Chairman, Taihua plc: +852 2573 5000
David Youngman / Katy Mitchell; WH Ireland Limited : +44 (0)161 832 2174
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