Member Info for Billyboy2fromiii

Morning Fred,

Here is the link....

https://www.londonstockexchange.com/news-article/CHLL/appointment-of-strategic-advisers/15143946

(A very tired) BB2.

Craig,

Apologies. Did not mean that to be flippant or rude. Good that we are able to debate, that is all.

Fred,

Tricky game tonight. Nice away game to go to though. Quite like Craven Cottage. Very late night though!

BB2.

Gallini and TB,

While we are being civil…

You are obviously closer to the Co than me (associated on Telegram etc). Do you know if anyone has asked about when (I hope rather than if) there will be a Company Presentation available? Please take a moment to have a look at the TAAT Co Presentation. There is some very good stuff on there. Yes, some is Co specific but there is some good generic stuff on there too that in effect could apply to Chill.

Interested in your considered thoughts.

On way to match do poss pick this up later

Once again, good to have a civil discussion.

BB2

Thank you Gallini,

I must admit that I had missed that reference to SF.

Tobler,

Don’t get me wrong, I am not disputing it at all. I just think more could have made of it as it is obviously a very good retail chain to be stocked in.

Fully agree ref your Chill comments. As far as a brand name there is no competition (in my opinion) between CHILL and TAAT.

Good to have a civil exchange,

Chill, BB2 (bit better that TAAT, BB2)

Sorry Matt,

I probably rambled there!

What I was trying to say if that I have not actually seen (unless I am mistaken) CHLL say there product are stocked in Smoker Friendly stores. Please correct me by I don’t ever remember seeing the actual SF name stated.

Matt,

Let us agree on something (for a change)....

The name TAAT is not that clever, is it! I've just visited their website to be met by a message "Get a free packet of TAAT today". It just doesn't seem right, does it!

If you read their news releases though, they are very specific regards store numbers and locations. Yes, CHLL did confirm 500 stores in Florida (I was impressed with that and topped up on that news). However, I do not think CHLL have actually confirmed that SF is the "one of the largest tobacco-focused retail chains in the US (the 'Retail Chain')". I may be wrong on that but I do not remember that confirmation. Yes, I know there are photos on social media but I am talking about actual confirmation by CHLL.

I do agree, it would be good to get a split of SF/ATAAC stores. Especially in Florida as there are not that many SF stores there, so a large part of the 500 stores must be AATAC or "others".

If you can be bothered, take a look at the TAAT investor presentation. There is loads of really good stuff on there. I really do not understand why CHLL do not have an investor presentation available.

Good to debate, but must go now.

BB2.

RKB,

You do make a very good point.

It is also well documented that there is a valuation anomaly between the two Companies.

One thing that I have noticed is that TAAT seem to be much more clear and specific as regards store numbers and locations than CHLL. That may be deliberate on behalf of CHLL (as I think you are suggesting) and it may not. We will find out soon, I would suggest.

That is it from me as I've got a train to catch to watch LUFC in the Cup...

Regards, BB2.

Matt,

I have already stated that we will not know the gross margin for the current period from 1st April to to 30th September until we receive the interim accounts for this period. This period will (i expect) include a much higher proportion of store sales as compared to online sales. As such, the impact of online discounts should be much reduced and (I expect) a return to a profit margin (hence the trading profitably statement in the earlier RNS).

It will be good if we get a breakdown of online (UK/US) v store sales (US) as regards revenue and margins but not sure if we will get this as this early stage.

BB2.

Dave,

The 30% stated in the RNS of 28th Jan is in relation to the gross margin in the interim accounts for period to 30th Sept and NOT in relation to business to business distribution deals. Don’t know where you get that from?

Obviously any discounts given to customers/investors will reduce the gross revenue received and thus reduce the corresponding profit margin (against the corresponding cost of sales figure).

Obviously a growing Company trying to establish market share will obviously need to do discounts etc but this will consequently reduce gross revenues (compared to if sold at full price). So I do not have a problem with the discounts themselves, they are there to establish market share in the short term. Over time, discounts available will no doubt reduce.

Obviously some businesses rely upon discounts within their business model. Dominoes typically rely upon deals/discounts to “justify” charging nearly £20 for a pizza. Obviously nothing to do with CHLL but that model seems to work for them!

The accounts for period to 30th Sept will show where we are at (gross revenue and profit margin wise) for the current six month trading period.Obviously more store sales will make the online Zoetic discounts and any online Chill discounts largely insignificant (hopefully).

BB2

Matt,

My comment is based up on information released to the market via RNS on 31st August relating to the most recent accounts available. The point is that this information seems to contrast with the RNS statement on 28th January regarding 50% and especially the comment earlier of "well north of 50%".

BB2.

Blue,

... the company had already made clear that margins had temporarily fallen to 30% for reasons described here earlier, but clearly guided that they would be back to 50% in short order...

As per my post to Matt,

........"the temporary fall to 30%" ....... has now fallen further to completely wipe out that first six months 30% profit margin.

....."in short order"...... was obviously not that short order as the immediate following six months saw a "loss margin" rather than profit margin.

.....back to 50% in short order (ie., certainly by now being a very reasonable assumption).... Surely, you are not assuming/expecting a 50% profit margin for the current six months period 1st April to 30th September ????

We will have to await the interims for the answer but I am certainly not assuming such a profit margin. Time will tell.

BB2.

Matt,

Taking my previous post a step further.

A lot of people may be of the opinion that the more we sell then the more profitable we will become (economies of scale etc). This should obviously be true but only when we reach the relevant "tipping point". As the figures in my post show, we have not reached that point yet. Quite clearly, the second six months produced more revenue but in addition more costs of sales so less profit (actually a six month loss which wiped out the first six month profit). As I say, there will be a tipping point where losses become profit but we do not know when that will be. As we try and build the brand by offering new customer discounts (currently 20%) and investor discounts (30%) it pushes that tipping point out further. I have seen lots of investors on here commenting on taking advantage of the 30% discounts etc but this obviously nibbles away at any profit margin. In fairness, once the US store sales rise significantly then the online discounts (mainly Zoetic brand) will not really have that much of an impact. However, we do not currently know what (if any) discounts are being given to Chill in the US to try and gain market share. I seem to remember (have not checked this) that you were offered 50% online.

So lots to consider. But it is certainly a case of thinking there is a profit margin of "well north of 50%". Certainly not in the short term. 50% in the medium to long term, hopefully so.

I am looking forward to the October Q3 update as there should be lots of info to digest. It would be really good if the update actually breaks down Zoetic and Chill sales separately. Even better, if they are further broken down to store sales and online separately. When you look at a Fevertree RNS, for example, they break down On-Trade and Off-Trade (as well as now UK,US, ROW).

BB2

Hi Matt,

From the Results to 31st March 2021 RNS dated 31st Aug 2021.

Revenue £320,870
Cost of sales £361,517
Gross loss £40,642
Hence, Profit margin 0%. Loss margin (is there such a thing ?) 12.67%.

The Interim Results RNS for period to 30th Sept 2020 dated 28th Jan 2021 stated;

Revenue £54,554
Cost of Sales £37,976
Gross profit £16,578.
Hence, profit margin 30.39% (which is the 30% figure stated within the comments section of that RNS).

By deduction, the six month period from 1st October to 31st March saw revenue of £266,316 and cost of sales of £323,541. So a six month loss of £57,225. Profit margin 0%. Loss margin 21.49%.

To clarify, I understand that these are historic figures to 31st March 2021. I also understand that stated revenue since 1st April to date is approx $2m (some feel that there is more revenue not yet disclosed during this period). However, in my opinion, I feel it is very difficult to suggest profit margins "have been maintained" at "well north of 50%".

BB2.

Hi,

Just for clarity.

You did not state "my 50% margin assumption".

You actually stated " 'margins have been maintained' at levels we reckon are well north of 50%)"

Bearing in mind that since the 50% statement in the RNS dated 28th January, margins have apparently subsequently reduced to 0% (as per the results RNS dated 31st August), I would personally be happy to see margins firstly restored to 30%. If economies of scale eventually lead to a 50% margin in the medium term, then that would be great for shareholders. However, this will (in my opinion) be difficult to achieve whilst still needed to give 30% discounts etc (as is currently the case) while trying to build the brand in the short term.

I am still struggling to see stated margins "well north of 50%" as you originally stated....

BB2

Pecten,

I agree. I also understand that this was in reference to period to 30th Sept 20.

I have ignored the lack of margin for the period to 31st March and would rather wait and see the reported margin for period to 30th Sept 21. That figure will be more relevant.

BB2.

Hi Pecten,

https://zoeticinternational.com/investor-relations/investment-case/

last sentence right at the bottom of Investment Case... A commitment to Shareholder Returns.

I cannot personally find ANY reference to "well north of 50%" not even "50%". If others can post a link that confirms these figures then it would be much appreciated.

BB2

BB2.

Bluerill,

This is taken from the Co website.

"Gross margins for the period were approximately 30%"

Can I ask where is the info that you are referring to the states "well north of 50%" ???

BB2

Bluerill,

Fully agree that when Mr Market sees another 10m revenue then the current negativity will be replace by positivity..

I do need to pull you up on your margins "well north of 50%" comments. May I respectfully ask where you are getting this info from?

My understanding is that the original 50% comment has been replaced by 30%.

Also, the six moths to 31st March showed zero margin (in fact a trading loss, but admittedly very limited store sales as mainly online sales). It will be interesting what margin is proved in the six months to 30th September, as this will reflect much higher store v online sales).

Good to debate this with you...

BB2.

Morning,

I believe the whole thread (including my post this am) was taken down rather than individual posts. The admin thread has also just been removed....

On that basis, I will repost the key points from my earlier post.

Firstly, I agree with Bluerill that there is a (very) large valuation anomaly between CHLL and TAAT. I agree that this is no doubt partly due to the differing exchange jurisdictions. This is also very evident in some current natural resource Co valuation differences between UK and Canada/Aus.

However, I fully agree with Vas as regards the SHORT TERM valuation of CHLL. I stated on Telegram before the results RNS that is could be pivotal to the short term share price. And so it was proved. With the lack of post period comments, the sp quickly headed south to the 20's.

My view is that the next two RNSs (audited results which actually included post period comments along with Q3 update) could well be critical to the SHORT TERM valuation. If managements can show the store count numbers are again increasing and that revenue for Q3 is (hopefully) higher than Q2 then we may well (hopefully) see the start of a sp reversal. However, more fluffy jam tomorrow rather than actual store count and revenue increases will 9in my opinion) see us heading to the "teens" at best.

I stress that this is regarding the SHORT TERM share price. If Q3 disappoints there is always Q4 but that is in January 2022 which seems a long time to wait amid the current negative share price environment.

I will be an interesting two to three week period.

On final thing, Vas's current investment strategy regarding CHLL has certainly proved better than most (including mine). Yes, he does still need to pick his top-up point (which is not an easy call to get correct) but his realistic views have been proved correct so far.

Good luck to all genuine holder here.

BB2.

Good afternoon fellow shareholders,

If it is true that member(s) of the Telegram crew have been tipped off that "news" is due on the 27th, then that allows questions on that "news" to be asked at the AGM........

.............If shareholders wish to attend the AGM or submit questions to the Board, please contact Buchanan via chillbrands@buchanan.uk.com no later than 09:00am (MST) / 4:00pm (BST) on Tuesday, 28 September 2021.............

Will be interesting if the "news" lands on 27th or after 4pm on 28th....

Who do I email to request a t shirt ???

Regards to all genuine investors, BB2.