Provexis Regulatory News (PXS)

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.

30 December 2022

Provexis plc

UNAUDITED INTERIM RESULTS FOR SIX MONTHS TO 30 SEPTEMBER 2022

Provexis plc ("Provexis" or the "Company"), the business that develops, licenses and sells the proprietary, scientifically-proven Fruitflow® heart-health functional food ingredient, announces its unaudited interim results for the six months ended 30 September 2022.

Highlights

· Two new agreements secured with DSM in June 2022 for Fruitflow, to replace the Alliance Agreement: (i) a Transfer of Business agreement and (ii) a Premix and Market-Ready Solutions supply agreement, both to take effect from 1 January 2023.

· DSM's existing and prospective pipeline customers for Fruitflow as a straight ingredient will transfer to become direct customers of Provexis WEF 1 January 2023, and Provexis will take over the outsourced supply chain / production process for Fruitflow at that time. The customer transfer process from DSM to Provexis is currently ongoing, and thus far it has seen a number of positive interactions with existing and prospective new customers for direct sales of Fruitflow by Provexis in 2023 and beyond.

· New patent application filed in June 2022 relating to the use of Fruitflow to confer health benefits in modulating the gut microbiome of humans, following the completion of a successful human study.

· New partnership with DSM has been agreed relating to the gut microbiome patent, subject to certain milestones which have been agreed between the parties. Provexis and DSM are keen to progress this encouraging new technology towards an early commercial launch of products based on it.

· Planned launch by By-Health, a circa £5bn listed Chinese dietary supplement business, of a number of Fruitflow based products in the Chinese market is progressing well, with potential sales volumes remaining at a significant multiple of existing Fruitflow sales. The exclusive Fruitflow supply and distribution agreement which was agreed with By-Health in 2021 will take full effect from 1 January 2023.

· By-Health continues to work on an extensive regulatory submission to the Chinese State Administration for Market Regulation (SAMR) for Fruitflow, seeking to establish a new permitted health function claim for foods such as Fruitflow that can demonstrate an anti-platelet effect, addressing the aberrant blood clots which can lead to heart attacks and strokes.

· By-Health has made a significant investment in eight separate studies in China, at its sole expense, in support of the Fruitflow based products which it plans to launch in China. The five studies which have been completed by By-Health showed excellent results in use for Fruitflow, and provide strong evidence for By-Health in its regulatory submissions to the SAMR for Fruitflow.

· Total revenue for the period of £179k, 15% behind the prior six month period (2021: £211k), primarily due to short term lockdowns and other COVID-19 disruptions in some of the growing markets for Fruitflow in the Asia Pacific region.

· Cash of £745k at 30 September 2022 (30 September 2021: £982k).

Provexis Chairman Dawson Buck and CEO Ian Ford commented:

'The Company was delighted to announce the completion of two significant agreements with DSM in June 2022, which will position the Company extremely well for the next stage of its development.

The Company was also pleased to announce the filing of a new patent application for Fruitflow in June 2022, relating to the use of Fruitflow to confer health benefits in modulating the gut microbiome of humans. The patent application follows the completion of a successful human study, the results of which strongly support the use of Fruitflow for modulating gut microbiota to confer a number of health benefits, to include a reduction in TMAO. It is particularly encouraging to note that some potential new uses for Fruitflow were identified in the study, and have been highlighted in the patent application, looking to treat some major health conditions which are beyond Fruitflow's long established and proven use in heart-health.

The Company and DSM have had a strong long-term relationship over the past twelve years, with the shared interest of both companies always having been to maximise the commercial returns that can be achieved from Fruitflow. The Company remains appreciative of DSM's past help and support, and it looks forward to building on this relationship in the coming years through the new gut microbiome partnership, and through ongoing sales of Fruitflow to DSM's Premix and Market-Ready Solutions businesses.

The Company looks forward to welcoming and serving the majority of DSM's existing customers for Fruitflow from January next year, and is pleased to be taking over control of the supply chain / production process for Fruitflow at the same time. There will be some clear synergies from January 2023 as the Company will be looking to sell Fruitflow to: (i) former DSM customers for Fruitflow; (ii) DSM and its Premix and Market-Ready Solutions businesses; (iii) new customers for Fruitflow as a straight ingredient; and (iv) By-Health and its customers, through the Company's long term supply and distribution agreement for Fruitflow with By-Health. Provexis will continue to sell its Fruitflow+ Omega-3 dietary supplement product direct to consumers, and serve its Chinese Cross-Border e-commerce distributor for this product in China.

The Alliance Agreement business for Fruitflow is effectively now in a period of transition and handover; the customer transfer process from DSM to Provexis, for sales of Fruitflow from 1 January 2023 onwards, is currently ongoing and thus far it has seen a number of very positive interactions with existing and prospective new customers for direct sales of Fruitflow by Provexis in 2023 and beyond.

The Company's supply and distribution agreement for Fruitflow with By-Health, which was announced in November 2021, will take full effect from 1 January 2023. By-Health will file its regulatory submission to the SAMR for Fruitflow at the appropriate time, seeking to obtain a new permitted health function claim for foods such as Fruitflow that can demonstrate an anti-platelet effect. If By-Health is successful in obtaining a new permitted health function claim, it is currently expected that this would result in some significant orders for Fruitflow, potentially at a multiple of current total sales values.

Fruitflow is well placed to play an important role in the Chinese cardiovascular health market under the permitted health function claim legislation, and we look forward to working closely with By-Health seeking to maximise the commercial success of this agreement for the benefit of both companies.

The Company has developed a strong, long lasting and wide-ranging patent portfolio for Fruitflow, and it owns outright four existing patent families for Fruitflow. The new microbiome patent application takes this to a potential total of five patent families, with potential patent protection now running out to 2042. The four existing patent families have a truly global footprint, and the Company also holds other valuable intellectual property and trade secrets for Fruitflow. The intellectual property for Fruitflow is of fundamental importance to the Company and its current and future commercial partners, to include DSM and By-Health, and it underpins the numerous commercial opportunities which the Company and its partners are pursuing for Fruitflow.

The Company expects that the new gut microbiome patent application, and the other significant changes announced in June 2022 to the sales and supply chain structure for Fruitflow, will have a strongly beneficial effect on the current and future commercial prospects for Fruitflow and the business worldwide.

The Company would like to thank its customers and shareholders for their continued support, and the Board remains positive about the outlook for Fruitflow and the Provexis business for the second half of the financial year and beyond.'

For further information please contact:

Chairman and CEO's statement

The Company has had an active first six months of the year, and it has made some further significant progress with the commercial prospects of its innovative, patented Fruitflow® heart-health ingredient.

DSM Nutritional Products

The Company's Alliance partner DSM Nutritional Products ('DSM') has continued to develop the market for Fruitflow in all global markets. More than 100 regional consumer healthcare brands have now been launched by direct customers of DSM, and a number of further regional brands have been launched through DSM's distributor channels.

The Company's alliance agreement with DSM dates back to June 2010, with a contractual term which runs to 31 December 2022.

In September 2021 the Company announced that it was engaged in constructive negotiations with DSM, working towards a new agreement for Fruitflow for the period after 31 December 2022 to replace the Alliance Agreement; in June 2022 the Company announced that the parties had concluded their negotiations and had entered into (i) a Transfer of Business agreement for Fruitflow and (ii) a Premix and Market-Ready Solutions supply agreement for Fruitflow, both to take effect from 1 January 2023.

The Company also announced the filing of a new patent application in June 2022 relating to the use of Fruitflow to confer health benefits in modulating the gut microbiome of humans. This followed the completion of a successful human study, the results of which strongly support the use of Fruitflow for modulating gut microbiota to confer a number of health benefits, to include a reduction in TMAO (trimethylamine-n-oxide).

Under the terms of the two new agreements with DSM, and the new patent application:

· DSM's existing and prospective pipeline customers for Fruitflow as a straight ingredient (not a Premix or Market-Ready solution) will transfer to become direct customers of Provexis WEF 1 January 2023.

· DSM will help facilitate the transfer of its wholly outsourced supply chain / production process for Fruitflow from DSM to Provexis with effect from 1 January 2023.

· A royalty will be payable to DSM on the gross profits generated from Fruitflow sales to customers transferred from DSM over the first four years of the Transfer of Business agreement.

· From 1 January 2023 the net profit accruing to Provexis on sales of Fruitflow in the calendar year - on a pro-forma basis, assuming like for like sales and margins - would be materially ahead of the net share of the profit that would have accrued to Provexis with like for like sales and margins under the existing 2010 Alliance Agreement; on the same pro-forma basis, assuming like for like sales and margins, the net profit accruing to Provexis would further increase in each of the subsequent three calendar years.

· A new partnership with DSM has been agreed relating to the gut microbiome patent. This partnership will give DSM preferential access to the use, marketing, and sale of Fruitflow based products which are based on the patent, subject to certain milestones which have been agreed between the parties. Provexis and DSM are keen to progress this encouraging new technology towards an early commercial launch of products which are based on it.

· The results of the successful gut microbiome human study are in the process of being submitted for publication in a peer reviewed scientific journal. The patent application (i) states that the results of the human study strongly support the use of Fruitflow for modulating gut microbiota to confer a number of health benefits, and (ii) sets out some potential new uses for Fruitflow in treating a wide variety of human health conditions, beyond Fruitflow's existing established use in heart-health. The global digestive health market size was US$38 billion in 2019 and it is projected to grow to US$72 billion in 2027 at a high single-digit CAGR in the 2020-2027 period (see www.fortunebusinessinsights.com/digestive-health-market-104750).

· Provexis will sell Fruitflow as a straight ingredient to DSM exclusively for use in DSM's Premix Solutions and Market-Ready Solutions businesses, with DSM then looking to sell the resulting Premix and Market-Ready Solutions products on to its customers. DSM's Premix and Market-Ready Solutions businesses are part of DSM's Customized Solutions business which also offers personalised nutrition solutions to customers, a rapidly developing growth area. The Company looks forward to supporting DSM and its Premix and Market-Ready Solutions customers for many years to come.

· A number of DSM's customers for Fruitflow which are set to be transferred to Provexis have been Fruitflow customers for several years, including some distributor customers which sell Fruitflow on to third parties. The Company has been progressing these sales relationships since the Transfer of Business agreement was announced in June 2022, and confirms it will be able to generate new customers for Fruitflow outside the royalty arrangements with DSM, in addition to its existing supply and distribution agreement for Fruitflow with By-Health. The Company is in discussions with a number of third parties seeking to progress new sales and distribution opportunities for Fruitflow.

From 1 January 2023 the Group's sales channels for Fruitflow will therefore include:

1. Former DSM customers for Fruitflow;

2. DSM and its Premix and Market-Ready Solutions businesses, which will leverage the resources and relationships of DSM in some of the major global markets;

3. New customers for Fruitflow as a straight ingredient;

4. By-Health and its customers, through the Company's long term supply and distribution agreement for Fruitflow with By-Health; and

5. The Group's Fruitflow+ Omega-3 dietary supplement product which is sold direct to consumers, the Group will also look to serve its Chinese Cross-Border e-commerce distributor for this product in China.

An increasing number of commercial projects have been initiated by DSM with prospective customers in recent years, including some prospective customers which are part of global businesses, and the total projected annual sales value of the prospective sales pipeline for Fruitflow continues to stand at a substantial multiple of existing annual sales.

The Alliance Agreement business for Fruitflow is now in a period of transition and handover; the customer transfer process from DSM to Provexis, for sales of Fruitflow from 1 January 2023 onwards, is currently ongoing and thus far it has seen a number of very positive interactions with existing and prospective new customers for direct sales of Fruitflow by Provexis in 2023 and beyond.

The Company can be contacted for all Fruitflow sales enquiries by email at fruitflow@provexis.com.

Trading summary - six months ended 30 September 2022

In the six months ended 30 September 2022 total revenues were £179k, 15% behind the prior six month period (2021: £211k), reflecting:

· A decrease in the net income received from the Company's Alliance Agreement with DSM, which fell by 28% to £97k in the period (2021: £135k). The decrease was primarily due to short term lockdowns and other COVID-19 disruptions in some of the growing markets for Fruitflow in the Asia Pacific region, leading to more erratic demand in the short term; and

· An increase in revenue, net of sales rebates, from the Company's Fruitflow+ Omega-3 business, including the Company's website www.fruitflowplus.com, Amazon UK, Holland & Barrett, and the Company's distributor for Fruitflow+ Omega-3 in China through the CBEC channel. This business grew by 8% to £82k in the period (2021: £76k).

Loss from operations for the period was £174k, 20% higher than the prior period (2021: £145k).

By-Health Co., Ltd.

In November 2021 the Company announced it had entered into a supply and distribution agreement (the 'By-Health Agreement') for Fruitflow with By-Health, a listed Chinese dietary supplement business with a market capitalisation of approximately £5 billion.

The By-Health Agreement, which followed the Company's extensive work with By-Health over the last five years, will take full effect from 1 January 2023 and it gives By-Health exclusive supply and distribution rights to commercialise Fruitflow in Mainland China, Hong Kong, Macau, Taiwan and Australia (the 'Territories').

Under the By-Health Agreement Provexis will be responsible for the manufacture, supply and sale of Fruitflow to By-Health, and By-Health will be responsible for the manufacture, marketing, and sale of Fruitflow based functional food and dietary supplement finished products in the Territories, through By-Health's extensive sales network. By-Health will also have exclusive rights to act as the distributor of Fruitflow as an ingredient in the Territories.

Provexis and By-Health will seek to collaborate on research and development projects which may result in the development and approval of Fruitflow as a drug, for potential sale and distribution in the Territories.

Regulatory progress in China - new permitted health function claim

The Company has previously announced it has been working with By-Health to support the planned launch of a number of Fruitflow based products in the Chinese market, with potential volumes at a significant multiple of current Fruitflow sales.

The planned launch of Fruitflow based products in the Chinese market has been progressing well. Clinical studies conducted in China are typically required to obtain the necessary regulatory clearances in China, and a significant investment in eight separate Fruitflow studies has been undertaken at By-Health's expense.

Five studies have been successfully completed in China, and two clinical studies and one animal study are currently ongoing.

The five completed studies showed excellent results in use for Fruitflow, and they provide strong evidence for its efficacy on platelet function. The Chinese regulatory system for functional health food ingredients such as Fruitflow is governed by the State Administration for Market Regulation (SAMR), China's top market regulator, and it is based on a defined list of 27 permitted health function claims which brand owners are permitted to use on product labels.

Health function claims are based on test methods and criteria that have been systematically evaluated and verified, and it is currently envisaged that the existing list of 27 permitted health function claims might be reduced to a revised list of 24 permitted claims. The SAMR provides the possibility of adding new health function claims to the list, as long as the claim can be evaluated and verified by the SAMR.

Under SAMR regulations functional health foods need to indicate a relationship between a food or nutrient and a consequent health improvement which falls under one of the permitted health function claims.

SAMR certified functional health foods are required to use a blue cap / blue hat logo on their product packaging, which identifies products as approved functional health foods.

By-Health's regulatory clearance preparations for Fruitflow were originally focussed on obtaining blue cap health claim status for some Fruitflow based products in China, under the existing 27 permitted health function claim structure.

By-Health is now working on an extensive regulatory submission to the SAMR for Fruitflow, seeking to establish a new permitted health function claim for foods such as Fruitflow that can demonstrate an anti-platelet effect, inhibiting platelet function and conferring beneficial effects for people who are at risk of platelet hyperactivity-associated thrombosis.

By-Health has recently updated its website (see www.by-health.com/en/aboutus) stating that it has completed: 'Research comprehensively in the cardiovascular health area. We have developed a new product made with Fruitflow®, popularly known as 'natural Aspirin'. It helps to maintain normal platelet aggregation.'

By-Health will file its regulatory submission to the SAMR for Fruitflow at the appropriate time, seeking to obtain a new permitted health function claim which would be in addition to the currently defined list of 27 (reducing to 24) permitted claims. Subject to the timing the new anti-platelet claim, if approved, would therefore represent the 28th - or the 25th - permitted health function claim in China.

If By-Health is successful in obtaining a new permitted health function claim for functional health foods such as Fruitflow that can demonstrate an anti-platelet effect, it is currently expected that this would result in some significant orders for Fruitflow, potentially at a multiple of current total sales values.

COVID-19

Fruitflow was recognised in a review article by the Frontiers in Nutrition journal www.frontiersin.org/articles/10.3389/fnut.2020.583080/full in 2020 which stated that nutraceuticals such as Fruitflow may serve as:

'A safe antiplatelet prophylactic treatment for those at high risk of COVID-19 who may also be at increased risk of thrombotic complications and an alternative to pharmacological compounds that may cause greater risk of bleeding.'

A review article, titled 'Platelet hyperactivity in COVID-19: Can the tomato extract Fruitflow® be used as an antiplatelet regime?' www.sciencedirect.com/science/article/pii/S0306987720333715 was published in 2021 by the peer-reviewed journal Medical Hypotheses, a leading journal which advances new discussion and innovation in medical treatments.

The article was written by Professor Asim K Duttaroy, the original inventor of Fruitflow, and Dr Niamh O'Kennedy, Provexis plc's Chief Scientific Officer, and it concluded with the suggestion that:

'Consuming Fruitflow®, especially before or during the early stages of COVID-19 illness, may have an effect on the severity of illness experienced. It may particularly benefit people who are more vulnerable to the development of endothelial / platelet dysfunction. It is a safe dietary antiplatelet and should be investigated as a potentially useful intervention for prevention of thrombotic disorders in COVID-19.'

Market opportunity

A study backed by scientists from the National Center for Cardiovascular Diseases in China which was updated in 2020 (www.ncbi.nlm.nih.gov/pmc/articles/PMC7008101/#) stated that:

· the prevalence of Cardiovascular Disease ('CVD') in China has been increasing continuously since 2006; approximately 290 million patients in China now have CVD; and

· two in five deaths in China are attributed to CVD, with CVD remaining the leading cause of death in 2016.

In December 2020 the World Health Organisation reported (www.who.int/news/item/09-12-2020-who-reveals-leading-causes-of-death-and-disability-worldwide-2000-2019): 'Heart disease has remained the leading cause of death at the global level for the last 20 years. However, it is now killing more people than ever before. The number of deaths from heart disease increased by more than 2 million since 2000, to nearly 9 million in 2019. Heart disease now represents 16% of total deaths from all causes. More than half of the 2 million additional deaths were in the WHO Western Pacific region.' The WHO Western Pacific region includes China.

By-Health's long-term goal of science-based nutrition is to achieve 'comprehensive intervention for human health' (www.by-health.com/en/aboutus), and Fruitflow is well placed to provide such intervention in the Chinese cardiovascular health market.

Fruitflow+ dietary supplement products

Fruitflow+ Omega-3 is available to purchase from the Company's subscription focussed e-commerce website www.fruitflowplus.com, Amazon UK and Holland & Barrett.

The Fruitflow+ Omega-3 business grew by 8% to £82k in the period (2021: £76k), reflecting further growth in subscriber numbers on the www.fruitflowplus.com website, and a further order from the Company's Chinese Cross-Border e-commerce ('CBEC') channel.

The CBEC distribution agreement in China is separate but wholly complementary to the Company's work with By-Health, with the CBEC regulations enabling sales of Fruitflow+ Omega-3 in China now, prior to the health function claim which By-Health is seeking to secure.

Fruitflow+ Omega-3 has a social media presence on Facebook www.facebook.com/FruitflowPlus, Instagram www.instagram.com/fruitflowplus and Twitter https://twitter.com/FruitflowPlus.

The Company is seeking to expand further its commercial activities with Fruitflow+ Omega-3 and other Fruitflow+ combination products, and it is currently in dialogue with some other potential international direct selling customers.

Intellectual property

The Company is responsible for filing and maintaining patents and trade marks for Fruitflow, and patent coverage for Fruitflow now includes the following patent families which are all owned outright by Provexis:

Capital structure and funding

The Company is seeking to maximise the commercial returns that can be achieved from its Fruitflow technology, and the Company's cost base and its resources continue to be very tightly managed. The Company remains keen to minimise dilution to shareholders and it is focussed on moving into profitability as Fruitflow revenues increase, but while the Company remains in a loss-making position it may need to raise funds in the future to meets its working capital requirements.

Under the terms of the DSM Transfer of Business agreement which was announced in June 2022, DSM's existing and prospective pipeline customers for Fruitflow as a straight ingredient (not a DSM Premix or DSM Market-Ready solution) will transfer to become direct customers of Provexis WEF 1 January 2023.

The Company will need to hold Fruitflow in stock from 1 January 2023 onwards, to sell to new and existing customers, and the Company has therefore agreed to purchase from DSM the remaining stocks of Fruitflow which DSM holds on 31 December 2022. It is intended that the Company will pay DSM for this inventory over the course of a three month sale back period, commencing on 1 January 2023, with payments due equally (amounting to one third of DSM's 31 December 2022 inventory) on 31 January 2023, 28 February 2023 and 31 March 2023. The amount of inventory which DSM will hold at 31 December 2022 will depend primarily on DSM's sales of Fruitflow in 2022, which will be notified to the Company in late January 2023, hence it is not currently possible to state with any certainty how much inventory will remain at 31 December 2022, or therefore the amount which the Company would need to pay DSM for this inventory on 31 January 2023, 28 February 2023 and 31 March 2023.

Under the terms of the DSM Transfer of Business agreement, the Company can elect in the first quarter of 2023 to purchase some but not all of DSM's remaining stocks of Fruitflow at 31 December 2022, being a decision which the Company will seek to make in the first quarter of 2023 once the Company has a clearer understanding of (i) the amount of stock remaining at 31 December 2022, (ii) the best before dates of this inventory, which are currently estimated to be favourable / long dated in light of recent production runs of new Fruitflow material in 2022, (iii) likely customer demand in 2023 and beyond and (iv) the Company's financial resources at that time.

The amount of stock which will remain at 31 December 2022 clearly remains uncertain as set out above, although it is currently expected to be in excess of €1m (one million Euros), an amount which - if the Company elected in the first quarter of 2023 to purchase this inventory in its entirety, which is likely to be in the Company's best interests - would require further equity or loan finance. Subject to the outcome of ongoing negotiations with a third party, the Company might also be able to hold some of this stock on a consignment basis, only paying for the stock when it was required for sale.

Based on its current level of cash it is expected that the Group will therefore need to raise further equity finance, or potentially new loan finance, in the coming months, a situation which is deemed to represent a material uncertainty related to going concern.

Considering the success of previous fundraisings and the current performance of the business, the Directors have a reasonable expectation of raising sufficient additional equity capital or new loan finance to continue in operational existence for the foreseeable future. Subject to the outcome of ongoing negotiations with a third party, the Company might also be able to hold some of its future stock requirements on a consignment basis, only paying for the stock when it was required for sale. For these reasons the Directors continue to adopt the going concern basis in preparing the Group's financial statements.

Outlook

The Company is pleased to report on another strong period of progress.

The Company was delighted to announce the completion of two significant agreements with DSM in June 2022, which will position the Company extremely well for the next stage of its development.

The Company was also pleased to announce the filing of a new patent application for Fruitflow in June 2022, relating to the use of Fruitflow to confer health benefits in modulating the gut microbiome of humans. The patent application follows the completion of a successful human study, the results of which strongly support the use of Fruitflow for modulating gut microbiota to confer a number of health benefits, to include a reduction in TMAO. It is particularly encouraging to note that some potential new uses for Fruitflow were identified in the study, and have been highlighted in the patent application, looking to treat some major health conditions which are beyond Fruitflow's long established and proven use in heart-health.

The Company and DSM have had a strong long-term relationship over the past twelve years, with the shared interest of both companies always having been to maximise the commercial returns that can be achieved from Fruitflow. The Company remains appreciative of DSM's past help and support, and it looks forward to building on this relationship in the coming years through the new gut microbiome partnership, and through ongoing sales of Fruitflow to DSM's Premix and Market-Ready Solutions businesses.

The Company looks forward to welcoming and serving the majority of DSM's existing customers for Fruitflow from January next year, and is pleased to be taking over control of the supply chain / production process for Fruitflow at the same time. There will be some clear synergies from January 2023 as the Company will be looking to sell Fruitflow to: (i) former DSM customers for Fruitflow; (ii) DSM and its Premix and Market-Ready Solutions businesses; (iii) new customers for Fruitflow as a straight ingredient; and (iv) By-Health and its customers, through the Company's long term supply and distribution agreement for Fruitflow with By-Health. Provexis will continue to sell its Fruitflow+ Omega-3 dietary supplement product direct to consumers, and serve its Chinese Cross-Border e-commerce distributor for this product in China.

The Alliance Agreement business for Fruitflow is effectively now in a period of transition and handover; the customer transfer process from DSM to Provexis, for sales of Fruitflow from 1 January 2023 onwards, is currently ongoing and thus far it has seen a number of very positive interactions with existing and prospective new customers for direct sales of Fruitflow by Provexis in 2023 and beyond.

The Company's supply and distribution agreement for Fruitflow with By-Health, which was announced in November 2021, will take full effect from 1 January 2023. By-Health will file its regulatory submission to the SAMR for Fruitflow at the appropriate time, seeking to obtain a new permitted health function claim for foods such as Fruitflow that can demonstrate an anti-platelet effect. If By-Health is successful in obtaining a new permitted health function claim, it is currently expected that this would result in some significant orders for Fruitflow, potentially at a multiple of current total sales values.

Fruitflow is well placed to play an important role in the Chinese cardiovascular health market under the permitted health function claim legislation, and we look forward to working closely with By-Health seeking to maximise the commercial success of this agreement for the benefit of both companies.

The Company has developed a strong, long lasting and wide-ranging patent portfolio for Fruitflow, and it owns outright four existing patent families for Fruitflow. The new microbiome patent application takes this to a potential total of five patent families, with potential patent protection now running out to 2042. The four existing patent families have a truly global footprint, and the Company also holds other valuable intellectual property and trade secrets for Fruitflow. The intellectual property for Fruitflow is of fundamental importance to the Company and its current and future commercial partners, to include DSM and By-Health, and it underpins the numerous commercial opportunities which the Company and its partners are pursuing for Fruitflow.

The Company expects that the new gut microbiome patent application, and the other significant changes announced in June 2022 to the sales and supply chain structure for Fruitflow, will have a strongly beneficial effect on the current and future commercial prospects for Fruitflow and the business worldwide.

The Company would like to thank its customers and shareholders for their continued support, and the Board remains positive about the outlook for Fruitflow and the Provexis business for the second half of the financial year and beyond.

Dawson Buck Ian Ford

Chairman CEO

1. General information, basis of preparation and accounting policies

General information

Provexis plc is a public limited company incorporated and domiciled in the United Kingdom (registration number 05102907). The address of the registered office is 2 Blagrave Street, Reading, Berkshire RG1 1AZ, UK.

The main activities of the Group are those of developing, licensing and selling the proprietary, scientifically-proven Fruitflow® heart-health functional food ingredient.

Basis of preparation

This condensed financial information has been prepared using accounting policies consistent with International Financial Reporting Standards in the European Union (IFRS).

The same accounting policies, presentation and methods of computation are followed in this condensed financial information as are applied in the Group's latest annual audited financial statements, except as set out below. While the financial figures included in this half-yearly report have been computed in accordance with IFRS applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

Use of non-GAAP profit measure - underlying operating profit

The directors believe that the operating loss before share based payments measure provides additional useful information for shareholders on underlying trends and performance. This measure is used for internal performance analysis. Underlying operating loss is not defined by IFRS and therefore may not be directly comparable with other companies' adjusted profit measures. It is not intended to be a substitute for, or superior to IFRS measurements of profit.

The interim financial information does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and has been neither audited nor reviewed by the Company's auditors James Cowper Kreston pursuant to guidance issued by the Auditing Practices Board.

The results for the year ended 31 March 2022 are not statutory accounts. The statutory accounts for the last year ended 31 March 2022 were approved by the Board on 29 September 2022 and are filed at Companies House. The report of the auditors on those accounts was unqualified, contained an emphasis of matter with respect to going concern, and did not contain a statement under section 498 of the Companies Act 2006.

The interim report for the six months ended 30 September 2022 can be downloaded from the Company's website www.provexis.com. Further copies of the interim report and copies of the 2022 annual report and accounts can be obtained by writing to the Company Secretary, Provexis plc, 2 Blagrave Street, Reading, Berkshire RG1 1AZ, UK.

This announcement was approved by the Board of Provexis plc for release on 30 December 2022.

Going concern

Under the terms of the DSM Transfer of Business agreement which was announced in June 2022, DSM's existing and prospective pipeline customers for Fruitflow as a straight ingredient (not a DSM Premix or DSM Market-Ready solution) will transfer to become direct customers of Provexis WEF 1 January 2023.

The Company will need to hold Fruitflow in stock from 1 January 2023 onwards, to sell to new and existing customers, and the Company has therefore agreed to purchase from DSM the remaining stocks of Fruitflow which DSM holds on 31 December 2022. It is intended that the Company will pay DSM for this inventory over the course of a three month sale back period, commencing on 1 January 2023, with payments due equally (amounting to one third of DSM's 31 December 2022 inventory) on 31 January 2023, 28 February 2023 and 31 March 2023. The amount of inventory which DSM will hold at 31 December 2022 will depend primarily on DSM's sales of Fruitflow in 2022, which will be notified to the Company in late January 2023, hence it is not currently possible to state with any certainty how much inventory will remain at 31 December 2022, or therefore the amount which the Company would need to pay DSM for this inventory on 31 January 2023, 28 February 2023 and 31 March 2023.

Under the terms of the DSM Transfer of Business agreement, the Company can elect in the first quarter of 2023 to purchase some but not all of DSM's remaining stocks of Fruitflow at 31 December 2022, being a decision which the Company will seek to make in the first quarter of 2023 once the Company has a clearer understanding of (i) the amount of stock remaining at 31 December 2022, (ii) the best before dates of this inventory, which are currently estimated to be favourable / long dated in light of recent production runs of new Fruitflow material in 2022, (iii) likely customer demand in 2023 and beyond and (iv) the Company's financial resources at that time.

The amount of stock which will remain at 31 December 2022 clearly remains uncertain as set out above, although it is currently expected to be in excess of €1m (one million Euros), an amount which - if the Company elected in the first quarter of 2023 to purchase this inventory in its entirety, which is likely to be in the Company's best interests - would require further equity or loan finance. Subject to the outcome of ongoing negotiations with a third party, the Company might also be able to hold some of this stock on a consignment basis, only paying for the stock when it was required for sale.

Based on its current level of cash it is expected that the Group will therefore need to raise further equity finance, or potentially new loan finance, in the coming months, a situation which is deemed to represent a material uncertainty related to going concern.

Considering the success of previous fundraisings and the current performance of the business, the Directors have a reasonable expectation of raising sufficient additional equity capital or new loan finance to continue in operational existence for the foreseeable future. Subject to the outcome of ongoing negotiations with a third party, the Company might also be able to hold some of its future stock requirements on a consignment basis, only paying for the stock when it was required for sale.

For these reasons the Directors are of the opinion that at 30 December 2022, the Group and Company's liquidity and capital resources are adequate to deliver the current strategic objectives and 2023 business plan and that the Group and Company remain a going concern.

Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2022, as described in those annual financial statements.

2. Segmental reporting

The Group's operating segments are determined based on the Group's internal reporting to the Chief Operating Decision Maker (CODM). The CODM has been determined to be the Board of Directors as it is primarily responsible for the allocation of resources to segments and the assessment of performance of the segments. The performance of operating segments is assessed on revenue.

The CODM uses revenue as the key measure of the segments' results as it reflects the segments' underlying trading performance for the financial period under evaluation. Revenue is reported separately to the CODM and all other reports are prepared as a single business unit.

3. Earnings per share

Basic earnings per share amounts are calculated by dividing the profit attributable to owners of the parent by the weighted average number of ordinary shares in issue during the period.

The loss attributable to equity holders of the Company for the purpose of calculating the fully diluted loss per share is identical to that used for calculating the basic loss per share. The exercise of share options would have the effect of reducing the loss per share and is therefore anti-dilutive under the terms of IAS 33 'Earnings per Share'.

Basic and diluted loss per share amounts are in respect of all activities.

There were 171,500,000 share options in issue at 30 September 2022 (2021: 168,500,000) that are currently anti-dilutive and have therefore been excluded from the calculations of the diluted loss per share.

4. Share capital and Total Voting Rights

At 30 December 2022, the date of this announcement, the Company's issued share capital comprises 2,217,821,523 ordinary shares of 0.1 pence each, each with equal voting rights. The Company does not hold any shares in treasury and therefore the total number of ordinary shares and voting rights in the Company is 2,217,821,523.

The above figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

5. Cautionary statement

This document contains certain forward-looking statements with respect to the financial condition, results and operations of the business. These statements involve risk and uncertainty as they relate to events and depend on circumstances that will incur in the future. Nothing in this interim report should be construed as a profit forecast.