Notes to the Financial Statements

Basis of preparation

Chill Brands Group plc (the 'Company') is a public limited company, which is listed on the London Stock Exchange and incorporated and domiciled in the UK. The registered office of the Company is 27/28 Eastcastle Street, London W1W 8DH.

The preliminary results (unaudited) (referred to as the 'preliminary results') include the results of the Company and its subsidiaries (together referred to as the 'Group'). The preliminary results of the Group have been prepared on the basis of the accounting policies set out in the statutory financial statements for the year ended 31 March 2020. Whilst the financial information included in this announcement has been computed in accordance with the recognition and measurement requirements of international accounting standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union, this announcement does not itself contain sufficient disclosures to comply with IFRS.

The information for the year ended 31 March 2021 does not constitute statutory accounts for the purposes of section 435 of the Companies Act 2006. A copy of the accounts for the year ended 31 March 2020 was delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under section 498(2) or 498(3) of the Companies Act 2006. The audit of the statutory accounts for the year ended 31 March 2020 is not yet complete. These accounts will be finalised on the basis of the financial information presented by the Directors in these preliminary results and will be delivered to the Registrar of Companies following the Company's annual general meeting.

The preliminary results are prepared on the historical cost basis. The same accounting policies, presentation and methods of computation are followed in the preliminary results as were applied in the Group's 2020 annual audited financial statements.

Going Concern

The Directors have considered the financial performance and position of the Company, the post year end fundraising of £6 million, fees settled, as well as the outlook for future financial years including the distribution agreements signed, post year end performance and the general market. The Directors have taken these into consideration and applied them to a variety of scenarios including a worst case scenario of no sales and a linked reduced cost base. Based on this the Directors consider it appropriate to adopt the going concern basis in the preparation of this preliminary announcement.

1. General Information

Chill Brands Group plc ("the Company") (formerly Zoetic International plc) and its subsidiaries (together "the Group") are involved in the development, production and distribution of premium cannabidiol (CBD) products.  The Company, a public limited company incorporated and domiciled in England and Wales, is the Group's ultimate parent company. The Company was incorporated on 13 November 2014 with Company Registration Number 09309241 and its registered office and principal place of business is 27/28 Eastcastle Street, London W1W 8DH.

2. Segment Reporting

In the opinion of the Directors, there were no separate operational segments to be reported upon during the current or previous year. The Group's oil and gas activities have been discontinued in the prior year with the remaining activities of the Group relate to its CBD business activities in the United States and UK. Information relating to the CBD activities are shown in the primary statements.

3. Other Expense

On 9 March 2021, the Group entered into a financing agreement with LDA Capital Limited which included a termination clause of £1,200,000 to terminate the agreement. On 4 May 2021, the Group announce the termination of the financing agreement with LDA Capital Limited and entered into a settlement agreement to pay LDA Capital £1,200,000 to terminate the financing agreement. As of 31 March 2021, the Group accrued £1,200,000 to the settlement and termination of the financing agreement with LDA Capital Limited with the charge recorded to other expense.

4. Taxation

The Directors consider that there are no material disallowable costs or timing differences in respect of the current year.

Estimated tax losses of £26,000,000 (2020: £20,000,000) may be available for relief against future profits. The deferred tax asset not provided for in the accounts based on the estimated tax losses and the treatment of temporary timing differences, is approximately £5,200,000 (2020: £4,000,000). Utilization of these losses in future may or may not be possible depending upon future profitability within the Group and the continued availability of the losses due to the change in the Group's core activities.

5. Inventories

6. Trade & Other Receivables

All amounts in trade receivables are due within 3 months. Prepayments & other debtors includes £nil  (2020: £nil) which is receivable in more than one year.

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value. Fair values have been calculated by discounting cash flows at prevailing interest rates.

Included in Trade and Other receivables were Loan Notes totaling £nil (2020: £1,190,500). These arose from the exercise of 23,810,000 warrants in March 2020. In order to facilitate the exercise of these warrants which would generate funds for the company of £1,190,500, the Company allowed the transfer of the warrants to a new holder and their immediate exercise, with the payment of the exercise price being deferred via the Loan Notes. The loans carry interest at 1% per annum and are secured against the underlying shares. The loans were repayable in 10 equal monthly instalments commencing 30 April 2020.

The Group applies the IFRS9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and ageing. The Group's customer base is of a similar bracket and share the same characteristics, as such these have been treated as one population. The expected lifetime losses are considered to be £nil.

7. Trade & Other Payables

Bank borrowings represent a loan to a US based subsidiary, secured on the producing assets of that subsidiary. The loan was for an initial period of one year but has been extended pending disposal of the underlying assets, which took place post year end when the loan was repaid. The loan carried interest at 5% above US base rate. The net debt of the Group decreased from £256,929 at 31 March 2020 to £nil at 31 March 2021 as part of the sale of the oil and gas assets held for sale.

Trade payables and accruals principally comprise amounts outstanding for trade purchases and continuing costs. The Directors consider that the carrying amount of trade and other payables approximates to their fair value. Fair values have been calculated by discounting cash flows at prevailing interest rates.

8. Equity

The Company has only one class of share. All ordinary shares have equal voting rights and rank pari passu for the distribution of dividends and repayment of capital.

At 31 March 2021 there were options outstanding over 7,155,000 unissued ordinary shares (2020: 7,405,000). Details of the options outstanding are as follows:

8. Equity continued

The options held by N G S Tulloch were exercisable between 8 October 2021 and 8 October 2029. Those options were relinquished in the current year upon Mr. Tulloch resigning from the Board of Directors.

The warrants held by T. Taylor and A. Russo are exercisable until 8 October 2029.

The market price of the shares at the year end was 83.50p per share.

During the year, the minimum and maximum prices were 4.13p and 104.53p per share respectively.

Share Base payments: In April 2020, options of 12,900,000 shares were vested to both T. Taylor and A. Russo at 8.5p. At 31 March 2021, the Group recorded 1,096,500 in share based compensation for the vested options.

In October 2020, T. Taylor and A. Russo were granted options of 5,775,000 shares which are vested over three years from the date of grant in October 2019 subject to continued employment and performance obligations. At 31 March 2021, the Group recorded 1,410,268 in share based compensation for the granted options.

-ENDS-

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