21 February 2022

Graft Polymer (UK) Plc

("Graft Polymer", the "Company", and together with its subsidiaries, the "Group")

Update on Operations

Graft Polymer (UK) Plc (LSE: GPL), a business focused on the development of polymer modification, biological supplements and drug delivery systems, is pleased to announce that it is making strong progress on its operational strategy, as set out at the time of its IPO in January 2022.

Graft Polymer anticipates an increase in commercial orders following successful trials. In preparation to meet demand, the Company has moved to a two-shift operation at its Slovenia production facility to ensure order fulfilment. Full production capacity at the existing facilities is results in an output of 4,000 tonnes of product per annum.

This is in line with the strategy of investing in additional equipment at its facility to increase the production capabilities as set out in the IPO prospectus. These investments will allow the Company to increase its current production output to 6,000 tonnes per annum.

Patent Awards

Furthermore, the Slovenian Intellectual Property Office has awarded the Company four new patents. The Company was recently awarded RU 2765946 Patent on SNEDDS (IV type Nanoemulsion), which is valid up to 2041 and is awaiting a SIPO series of an additional four patents in the immediate future. Additionally, two patents are in the process of changing names to reflect their importance to Graft Polymer's research and development: RU 2359978, RU 2404997. As a result, Graft Polymer's IP portfolio will consist of seven total patents. The seeking of patents for Graft Polymer proprietary products is in line with the Company's layered IP strategy.

Additionally, Graft Polymer has completed the expansion of its specialist facilities in Slovenia and is in the final stages of its Hazard Analysis and Critical Control Point ("HACCP") certification, while it continues to focus on improving its Good Manufacturing Practices ("GMP") status.

Victor Bolduev, Chief Executive Officer of Graft Polymer, commented: "We are very pleased with the progress we have made since our IPO at the beginning of the year, as we continue to execute on our outlined strategy. We are deploying the funds raised to accelerate our ability to bring innovative products to the market, with a focus on our biological supplement division where we have completed the development of a novel GraftBio SNEDDS-Food. The ability for the business to secure patents for our proprietary products and formulations, highlights the value in Graft Polymer's Intellectual Property, which is at the heart of our business and strategic focus"

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About Graft Polymer

Graft Polymer is a UK incorporated holding company with an innovative research and manufacturing facility, based in Slovenia. The core business of the Group comprises polymer modification and drug delivery systems developments. Established in 2017, the Group has already introduced more than 50 products to the market.

The Group has developed a proprietary set of polymer modification technologies, which can improve existing products and processing methodologies by enhancing performance, simplifying manufacturing, reducing material consumption, widening the choice of feedstocks, and reducing costs.

In particular, the Group's techniques allow the combination of otherwise incompatible polymers, facilitating the creation of polymer composites engineered at a molecular level, that combine the attractive properties of different input materials. This enables customers to receive a synergism of properties in polymer composites.

The solutions and products offered by the Group are designed to improve performance, reduce raw materials consumption, and enhance the physical characteristic values of finished products or improve or modify their chemical interaction. In the past several years, there has been increased emphasis by the industry as a whole on applications of grafted polymers, which are produced by monomers being covalently bonded and polymerised as side chains onto the main polymer chain (the backbone).

In 2020, the Group launched a new division named GraftBio to develop IP for Bio/Pharma applications. This includes a drug delivery system to support and provide solutions to the market, which had been heavily impacted by the COVID-19 pandemic. The GraftBio division is in the process of obtaining the HACCP certification for its production facility. The Group has developed a set of drug delivery platforms that enable it to licence its DDS platform (IP) to MGC Pharmaceuticals Limited ("MGC"; LSE: MXC) in relation to MGC's CimetrA™ and CannEpil-IL™ products. The Group expects to receive royalty payments resulting from the sale by MGC of CimetrA™ and CannEpil-IL™ products.