CHLL Chill Brands Group Plc

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.

9 December 2024

Chill Brands Group plc

("Chill Brands" or the "Company")

Company Update

Chill Brands Group, the consumer packaged-goods distribution company, provides the following update regarding its trading activities, ongoing legal proceedings, and efforts to complete its audit for the 2024 financial year.

Share Suspension and Audit

Further to the suspension in trading of its ordinary shares on 3 June 2024, the Company has lodged a request for the continuation of the suspension of its shares with the Financial Conduct Authority (FCA).

The publication of the Company's audited 2024 annual report is a prerequisite for the lifting of the suspension of its shares. The Company continues to work diligently on its audit for the 2024 financial year and is collaborating closely with its statutory auditors to progress this process. The Company anticipates completing its audit and publishing its 2024 financial report during the first quarter of 2025, at which point it is also expected to publish its unaudited half-yearly financial statements to 30 September 2024.

Legal Proceedings

As announced on 25 July 2024, the Company has initiated legal proceedings to recover key assets including the chill.com website domain. A scheduling and planning hearing, at which a timeline for future milestones in this litigation will be established, is scheduled for 19 December 2024.

The Company remains committed to resolving these matters expeditiously and in the best interests of its shareholders. Discussions between the parties are ongoing. The Board of Directors is considering all options available to the Company and will provide further updates as matters progress.

Trading and Product Development

Vaping Product Strategy and Launch of E-Liquid Range

In anticipation of the UK's ban on single-use vapes effective 1 June 2025, the Company continues to collaborate with manufacturing partners to develop and launch compliant rechargeable, reuseable pod-based vape products.

In light of the UK government's Tobacco and Vapes Bill, the appetite among retailers to stock single-use vape devices has diminished, leading to a decline in the Company's UK domestic sales. While the Company has continued to sell its existing products, it does not anticipate a significant resurgence in ongoing demand for these single-use products in the UK. Despite these pressures, the Company remains committed to serving international markets, where its existing range of single-use devices remain compliant and in demand. The Company is actively engaged in discussions with potential distribution partners to expand the global reach of its product range.

In addition to vaping devices, the Company will expand its range of vaping products by launching a line of nicotine-free e-liquids. The Company's first e-liquids are currently in production and are expected to launch in early 2025. This range consists of e-liquid 'shortfills' in 10 flavours, designed for use with refillable vape devices. Shortfill e-liquids are larger bottles of the fluids used to produce vapour with space to add nicotine shots if desired, providing flexibility for users while complying with regulatory restrictions.

In line with the continued progress of new legislation including the Tobacco and Vapes Bill, the Company recognises the potential for future marketing regulations in the vaping sector. As such, the Company has developed a deliberately minimalistic brand design that will be applied to its new range of vaping products. The revised branding strategy features clean, simplified visual aesthetics and predominantly neutral colour palettes in preparation for compliance with any future restrictions.

Distribution Partnerships

Recognising the strategic value of its retailer network and internal sales capabilities, Chill Brands has established a new business division that is dedicated to supporting third-party brand partners seeking exposure to new retail venues in the UK and Europe. This physical extension of its e-commerce marketplace strategy involves partnering with brands in emerging industries and utilising Chill's established retail connections to facilitate multi-channel growth in convenience stores, pharmacies and other specialist outlets.

The Company has secured its first partnership agreement to represent an international brand offering oral nicotine pouches and natural energy drinks. This partnership will provide a monthly revenue stream and potential sales commission upside. Additional brand partnership discussions are currently in progress.

This new distribution concept allows Chill Brands to leverage its existing infrastructure, sales team, and market connections. By acting as an in-market partner for third-party brands, the Company can generate revenue and potential upside while minimising the financial risks associated with new product development, manufacturing, and initial market entry. The approach will allow the Company to rapidly pivot to opportunities in new high-growth product categories without being constrained by traditional product development cycles.

Callum Sommerton, Chief Executive Officer of Chill Brands, said: "While the delay in completing the Company's audit is frustrating for investors and all involved, we are working hard and making progress with the relevant parties to complete and publish our accounts as soon as possible. In the meantime, we have been making headway with new product development and have established a new business stream to support our growth ambitions.

Having launched and grown our own brand in the UK within a nascent category we know what it takes to persist and prosper as a product-led business in this complex market.

By partnering with emerging brands and utilising our established sales and marketing infrastructure, we are transforming our previous limitations into a unique opportunity. This model allows us to diversify our commercial interests, generate new revenue streams, and put our accumulated market knowledge and sales resources to productive use.

We are delighted to have commenced our first partnership and are working to expand our roster of brands across a variety of product categories. I am committed to delivering growth for these partners and for Chill as we seek to resolve legacy issues and provide a clean platform from which to move forward."

-ENDS-

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About Chill Brands Group

Chill Brands Group plc (LSE: CHLL, OTCQB: CHBRF) is an international consumer packaged goods company focused on the development, marketing and distribution of wellness and recreational products. The Company's proprietary nicotine-free vapour products cater to the rapidly growing market for tobacco alternatives and are distributed by some of leading retail stores in the US and UK. Chill Brands also operates the chill.com e-commerce website, on which it is building a marketplace of products from third-party brands.

Publication on website

A copy of this announcement is also available on the Group's website at http://www.chillbrandsgroup.com