Directors Report 6 months to June 30 2018

Report of the Directors for the six months ended 30 June 2018 The Directors of Promisia Integrative Limited are reporting on the six months to 30 June 2018 for the company and its subsidiaries. The period under review has been impacted significantly by the Medsafe Alert on published on 15 February 2018. As stated in the first quarter announcement, sales reduced to very low levels immediately following the Alert and the media coverage which followed. Although sales have continued to recover, they are approximately 50% of where they were expected to be had the Alert not been published. Discussions with Medsafe continue. Sales for the period were $467,000, a 64% reduction over the same period in the previous year. The operating net loss for the period was $1,122,000, a significant increase on the 2017 result for the same period. There were plans to launch two complimentary products to the Arthrem range in June 2018 but these plans were cancelled due to the Medsafe Alert which claimed 14 liver related adverse reactions over a 22 month period. It is important to note that this adverse reaction rate represents 1 in 14,000 and is considered to be very rare by World Health Organisation guidelines. A number of the reports are highly questionable. At the time of the Medsafe Alert, Promisia had just launched Arthrem in Australia and Artevite (Canine product) in New Zealand. Both launches were supported by significant TV advertising which could not be cancelled. Sales of both products were affected as a result of the Medsafe Alert, rendering the launches less effective than planned while still carrying high costs. Australia The pharmacy distribution agreement with Pharmabroker Sales Pty Ltd in Australia continues to develop. Arthrem is now in approximately 600 pharmacies in NSW and we are in the final stages of securing access to a further 450 pharmacies nationwide. Although the Australian market is challenging, and sales are below expectations, we are gaining market recognition and developing a base of customers that are experiencing benefits from taking Arthrem. The reduction in sales in New Zealand and resulting cashflow constraints have limited our ability to spend the required amount on marketing in Australia. Canine Product The company's product Artevite, for the treatment of osteoarthritis in dogs, is on the market and has good distribution across the major pet chains. Sales are below expectation and we are currently reviewing the retail price to establish if a reduction will drive sales. The cash position of the company also limits the resources we have to invest in marketing other than with print and digital platforms. Further TV promotion is out of the question at this point. Brooklands Pet Products of New Plymouth continues to distribute Artevite on Promisia's behalf. The Future The drastic reduction in sales had a significant impact on cash flow. The company continues to explore options to fund the recovery of Arthrem sales in New Zealand. It may also include some changes to the product to ensure the future support of Medsafe. The Directors are evaluating options to recapitalise the company. They will notify shareholders when a preferred course of action has been finalised. For further information please contact: Mr Stephen Underwood, Chairman on 027 499 3387 Mr Rene de Wit, CEO on 021 571000 End CA:00322764 For:PIL Type:HALFYR Time:2018-08-24 15:08:47