Chill Brands : Annual Report March 2023

Chill Brands Group PLC

Annual Report and Consolidated Financial Statements

For the year ended 31 March 2023

CHILL BRANDS GROUP PLC

("Chill", the "Company", or the "Group")

ANNUAL REPORT AND CONSOLIDATED

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2023

Company Registered Number: 09309241

Table of Contents

Page

• Officers and Professional Advisers

• Chief Executives' Review and Strategic Report
  7 Chief Executive's Financial Review

1. Chief Executive's Review and Strategic Report - Other Matters

1. Key Personnel

1. Director's Report

1. Directors' Remuneration Report

1. Independent Auditor's Report to the Members of Chill Brands, PLC

1. Consolidated Statement of Comprehensive Income
2. Consolidated Statement of Financial Position
3. Company Statement of Financial Position
4. Consolidated Statement of Changes in Equity
5. Company Statement of Changes in Equity
6. Consolidated Statement of Cash Flows
7. Company Statement of Cash Flows
8. Notes to the Financial Statements

Officers and Professional Advisers

Directors	Callum Sommerton (appointed 15 April 2022)
	Antonio Russo
	Trevor Taylor
	Eric Schrader
	Scott Thompson
Company Secretary	MSP Corporate Services Limited
Registered Office	Eastcastle House
	27/28 Eastcastle Street
	London W1W 8DH
US Operating Address	Suite 201
	1601 Riverfront Drive
	Grand Junction
	Colorado 81501
	United States of America
Independent Auditor	PKF Littlejohn LLP
	Statutory Auditor
	15 Westferry Circus
	London E14 4HD
Brokers and Financial	Allenby Capital Limited
Advisors	5 St Helen's Place
	London EC3A 6AB
Solicitors	DMH Stallard LLP
	6 New Street Square
	New Fetter Lane
	London EC4A 3BF
Registrars	Share Registrars Limited
	The Courtyard
	17 West Street
	Farnham
	Surrey GU9 7DR
Principal Bankers	Clydesdale Bank
	15th Floor The Leadenhall Building
	122 Leadenhall Street
	London EC3V 4AB
Company Website	www.chillbrandsgroup.com
Product Websites	www.chill.com
	www.zoetic.com

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CHIEF EXECUTIVE'S REVIEW AND STRATEGIC REPORT

Introduction

I am pleased to present the Group's results for the financial year ended 31 March 2023 ("FY23" or the "Period").

During the Period there has been a material shift in our business strategy, driven by the need to adapt to survive in an ever-evolving market. As a result of factors that I will go on to explain, the market for CBD consumer products has become extremely challenging. With the best interests of the Group and its shareholders in mind, we have therefore redirected our efforts and resources towards several diversified business activities including the sale of nicotine-free vapour products and the development of an e-commerce marketplace on the Chill.com website. We believe that these activities hold great promise and have the potential to significantly enhance the Group's commercial prospects.

Over the past year our revenue has fallen short of expectations, and this is naturally disappointing. It is important to note, however, that our financial statements are reflective of a year of transition during which historical sales arrangements limited recordable revenue. They do not demonstrate Chill's growth potential in the rapidly expanding market for e-cigarette style vapour products, (where sales only commenced at the very end of the period covered) nor do they reflect the decisive action we have taken to control costs and improve operational efficiency.

While it is important to review the Group's financial performance during the Period, I strongly encourage you to fully consider Chill Brands' status today along with our plans for the future. Through continued progress across a diversified base of business, myself and the Board wholeheartedly believe that the Group is on course to move beyond its difficult past and grow to a position of stability and, in due course, profitability.

This report aims to provide you with greater insight into our decisions, the challenges faced by the business, and the steps we are taking to position Chill Brands for success.

Adapting to Changing Market Conditions

The history of Chill Brands is characterised by near-continuous evolution, from the Group's oil and gas origins as Highlands Natural Resources to its expansion into cannabidiol as Zoetic International. This evolution continued during the Period as changes to the Group's management structure prompted a thorough evaluation of its business model.

Following a thorough assessment of the Group's business activities, it became evident that the performance of its CBD products did not support the continuation of its strategy. It was also apparent that the Group's operations had become too costly when considered against sales results, as is often the case with early-stage consumer goods businesses. In response to these challenges, we took proactive measures to reduce overheads and streamline operations. We initiated a comprehensive cost optimisation program that focused on enhancing operational efficiency, reducing reliance on external providers and advisers, and reallocating resources to areas with higher growth potential. This exercise resulted in significant costs savings, the benefits of which will largely bear fruit during the financial year ending 31 March 2024.

The CBD Landscape

In addition to issues specific to the Group itself, it was also evident that wider macro problems existed, and continue to exist, within the market for cannabidiol (CBD) products. It became clear to the management team that a strategic shift was essential to secure the viability of the business.

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