RNS Number:3253M
Freeplay Energy PLC
16 May 2005
Embargoed until 07.00 Monday 16 May 2005
FREEPLAY ENERGY PLC (AIM:FRE)
PRELIMINARY RESULTS
FOR THE PERIOD ENDED 30 DECEMBER 2004
Freeplay Energy plc ("Freeplay", "the Group" or "the Company") announces its
preliminary results for the period ended 30 December 2004 following the
successful completion of the Group's initial public offering on AIM in March
2005.
Financial Highlights
- Turnover steady at US $6.3 million (2003: US $6.3 million)
- Substantial reduction in operating loss to US $0.7 million (2003: US
$11.9 million)
- Loss before tax reduced to US $2.0 million (2003: US $14.1 million)
Operational Highlights
- New products well received with initial orders placed
- Foot powered generator remains on target for 2005 launch in US
- Distribution agreements in place for UK and since year end new
agreement in the course of being finalised for the North American
market
- New patents secured in the US for the technology contained in the
FreeCharge cell phone charge system and the Sherpa range of flashlights
Rory Stear, Chairman and Chief Executive commented: "2004 was a year of
significant progress for Freeplay, culminating in the Group's successful
flotation on AIM in March 2005. The benefits of our restructuring are
demonstrated by the reduction in operating losses in the period.
We are delivering on our product development plan as outlined at the time of our
IPO and although the Board does not currently expect the benefits of this to
have an impact on the Group's sales until the second half of the current year
and beyond, we are encouraged by the opportunities currently available to the
Group and remain confident about Freeplay's prospects."
- Ends -
For further information, please contact:
Freeplay Energy plc 020 7851 2630
Rory Stear, Chairman and Chief Executive
Weber Shandwick Square Mile 020 7067 0700
James Chandler / Rachel Taylor
Charles Stanley & Co. Limited 020 7739 8200
Mark Taylor / Freddy Crossley
Notes to Editors: Freeplay Energy's core technology revolves around the
efficient conversion and storage of applied human energy, and the delivery of
this energy on demand as electricity to create self-powered electronic devices.
Initial applications include radios (both consumer and humanitarian), torches,
mobile phone chargers and standalone foot chargers and the Company has a new
product development plan which anticipates broadening the application of its
technology into new product categories. Freeplay believes it was first to market
and commercialise self-powered technology and that it is recognised as a leading
brand in this market for such products.
Established in 1994, the Company today has offices in both London and Cape Town
and floated on AIM, a market operated by the London Stock Exchange plc in March
2005. Further information about Freeplay Energy and its products can be found at
www.freeplayenergy.com.
Embargoed until 07.00 Monday 16 May 2005
FREEPLAY ENERGY PLC (AIM: FRE)
PRELIMINARY RESULTS
FOR THE PERIOD ENDED 30 DECEMBER 2004
Freeplay Energy plc ("Freeplay", "the Group" or "the Company") announces its
preliminary results for the period ended 30 December 2004 following the
successful completion of the Group's initial public offering on AIM in March
2005.
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
I am delighted to present Freeplay's first financial results as a public
company. The Company was admitted to AIM on 02 March 2005 raising approximately
$6.6 million. These funds were raised to repay existing debt, market the
Company's products, upgrade existing tooling, acquire tooling for new products
and support the future growth of Freeplay. The financial results reported in
this statement relate to the financial year that ended 30 December 2004 prior to
the IPO.
Company Overview
Freeplay was established in 1994 and has developed patented technology that
captures, stores and delivers electric power to self-powered devices such as
radios, torches and mobile phone chargers. The technology converts human energy
directly, in real time, into electricity. The applications for the technology go
far beyond the current product range into markets such as lighting, standalone
power packs and ruggedised medical monitoring devices. The Group is creating,
developing and supplying a rapidly growing market for self-powered energy
products on an international scale, both through its own products and by forming
strategic alliances with partners.
The technology is well patented and the Directors believe that Freeplay is the
world's only exclusive developer of these products and remains at the forefront
of this technology. It is the Director's belief that most products from
competitors are limited and less efficient than the Freeplay alternatives.
The 2004 financial year was one of good progress for the Company. Building on
the successful restructuring completed in 2003, Freeplay made advances in the
development and introduction of new products and in securing new routes to
market. The benefits of these developments became increasingly clear as we moved
through the year in particular through distribution of the Lifeline radio (aid)
and through increased sales with Tango Group Limited in the UK. This progress
culminated in the Company's successful flotation on AIM in March 2005.
Financial Results
For the period ended 30 December 2004, turnover was US $6.3 million (2003: US
$6.3 million) with sales in the second half of US $3.7 million contributing
strongly to overall turnover for the period. Like for like turnover in the UK
and Continental Europe was strong and increased by 37%, but decreased by 16% in
North America and by 13% throughout the rest of the territories in which we
operate. North America was impacted by the termination of an agreement with
Motorola Inc for distribution of FreeCharges.
Gross profit fell marginally to US $2.1 million (2003: US $2.2 million) as a
result of air freight incurred to fulfil commitments in the first half of the
year. Administrative expenses before goodwill amortisation and impairment
decreased by 36% to US $2.8 million (2003: US $4.4 million) as a result of the
Company's restructuring exercise completed in 2003. Freeplay reported a
substantial improvement in operating loss to US $0.7 million (2003: US $11.9
million) and the loss before taxation was reduced to US $2.0 million (2003: US
$14.1 million).
During the period, net debt increased by US $3.8 million to US $8.5 million
(2003: US $4.7 million). The Company issued #1.5 million (US $2.8 million) of
convertible loan stock in January 2005, which converted into 3,605,769 ordinary
shares on flotation. At flotation Freeplay raised US $6.6 million of which US
$2.1 million has been used to reduce debt. At 30 April 2005, Freeplay had a net
cash balance of US $2.1 million.
Dividend
As indicated at flotation, the Directors will not be recommending a final
dividend for the period ended 30 December 2004. The Directors' current intention
is to retain earnings in the foreseeable future to finance growth and expansion.
It is, however, the intention of the Directors to pay dividends when, in their
judgement, the company has sufficient distributable reserves and cash for this
purpose.
Operational Review
The restructuring exercise, which began in 2001 was completed in 2003 and has
delivered satisfying results in this reporting period. The exercise included the
closure of our manufacturing operations and the outsourcing of product
manufacture to China. This changed the nature of Freeplay's operations from a
manufacturer to a service provider using a network of distributors to promote
and sell our products. This re-organisation combined with the introduction of
new products had an increasingly positive effect on our performance as the year
progressed.
Freeplay's business can be broadly divided into two main areas of activity.
Firstly, operations relating to the current product portfolio including their
distribution and secondly, activities around the development of new products
through our research and development division Freeplay Technology.
Current Products
The current product range includes radios for consumer use, radios for
humanitarian use, torches and mobile phone chargers, all of which use our
technology in a combination of 'wind-up' and solar cell technology.
In the second half of 2004, Freeplay launched several new products including the
Freeplay EyeMax radio, the Freeplay Xray flashlight and the FreeCharge energy
source for mobile phones. These products have been well received and have
contributed to increased sales in the six months ended 30 December 2004. The
EyeMax radio and the Xray flashlight have secured listings with John Lewis
Department stores and Argos respectively in the United Kingdom.
The exclusive distributor arrangements finalised at the end of 2003 with
organisations such as Tango Group Limited (UK), CEID (Canada) and C. Crane
Company Inc. (US - catalogue) also contributed to an increase in sales in the
latter half of 2004. In particular, sales to Tango Group Limited (UK
distributor) increased fourfold during this period.
Freeplay Technology
Our new product development strategy aims to broaden Freeplay's technology into
new product categories in 2005, 2006 and beyond. Development of our foot powered
charger progressed particularly well in the period. The charger delivers 12
volts of power to a wide range of appliances and a diverse range of market
applications including auto, marine, mobile home, camping, military, medical and
communications markets. The first market we expect to target is the US private
marine market.
We are also exploring ways to expand the current product platforms and are
investigating ways in which to extend our technology to a range of lighting
systems, audio products and standalone power packs. In particular, Freeplay has
adapted a number of medical devices, including a foetal heart rate monitor and
pulse oximeter, to be driven by human power. Targeted at the developing world,
the products have also been simplified for ease of use by non-medical
professionals and ruggedised to withstand harsh environments. These products
remain in the pipeline as a result of the rigorous testing process required
prior to use.
Our People
John Hutchinson joined Freeplay in 1995 and has been involved with the
development of Freeplay's technology and products from the outset. He leads a
team of ten engineers and industrial designers, responsible for the advancement
of Freeplay's technology and the creation of new products. John was appointed
Technology Director in March 2004.
Richard Court joined Freeplay as Finance Director in April 2004. He has fifteen
years experience in financial and general international management. Most
recently, he spent eight years as director of finance and operations with NASDAQ
listed Periphonics Limited, a specialist computer hardware and voice driven
software company which was eventually acquired by Nortel Networks.
The Board would like to take this opportunity to thank all members of staff for
their contribution to the progress the Company has made during a period of such
significant change.
Post Year-End Developments
Since the year-end, we have had a number of significant and positive
developments within our business. In terms of products, our anticipated
production is progressing on track with our development plan outlined at the
time of our IPO in March. The Group has launched two additional variants of its
EyeMax radio; the EyeMax radio with light and an EyeMax radio with weatherband.
In addition, the Jonta flashlight has been introduced for manufacturing. Xray
LED Flashlight, FreeCharge Rapid and Light Centre are all in production with
initial shipments due for delivery towards the end of Q2 2005. The FreeCharge
foot powered generator remains on target for launch in North America in Q3 2005.
We are establishing a partnership with Hip Shing Electronics Limited to develop
a Digital Audio Broadcasting product for planned introduction to the UK in the
latter half of 2005. While we are making good progress it should be noted that
most of these new products will not have an impact on Group sales until the
second half of the current financial year and beyond.
While Q1 is a traditionally quiet period due to the closure of manufacturing for
Chinese New Year, a number of promising discussions for significant orders are
under way. These include an order of FreeCharge mobile phone chargers to Nigeria
and the Group is conducting a number of trials with FreeCharge in partnership
with major network providers in the developing world. In the UK, orders from
Tango Group have continued to reflect the strong performance seen in the latter
half of 2004.
A review of strategy for the North American market has resulted in the
development of a new distribution relationship, which encompasses a marketing
plan for existing and new products. The formal documentation cementing this
relationship is in the course of being finalised. This would enhance prospects
for an uplift in sales in this region from the second half of 2005.
In April 2005, new patents were secured in the US for the technology contained
in the FreeCharge cell phone charge system and the Sherpa range of flashlights.
Freeplay's Lifeline Radio is not sold commercially but is available to aid and
donor agencies (through various corporate sponsorships). The Group is currently
in negotiations to supply in excess of 20,000 Freeplay Lifeline radios to aid
organisations.
Outlook
2004 was a year of significant progress for Freeplay, culminating in the Group's
successful flotation on AIM in March 2005. The benefits of our restructuring are
demonstrated by the reduction in operating losses in the period.
We are delivering on our product development plan as outlined at the time of our
IPO and although the Board does not currently expect the benefits of this to
have an impact on the Group's sales until the second half and beyond, we are
encouraged by the opportunities currently available to the Group and remain
confident of Freeplay's prospects.
Rory Stear
Chairman and Chief Executive Officer
16 May 2005
AUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the period ended 30 December 2004
Notes Period ended 30 Dec Year ended 31 Dec
----------------------------- ------- 2004 2003
US $'000 US $'000
---------- -----------
Turnover -
continuing
operations 6,302 6,347
Cost of sales
- continuing
operations (4,188) (4,110)
----------------------------- ------- ---------- -----------
Gross profit 2,114 2,237
----------------------------- ------- ---------- -----------
Administrative
expenses
before
goodwill
amortisation
and impairment (2,806) (4,387)
Goodwill
amortisation - (2,173)
Goodwill
impairment - (7,606)
----------------------------- ------- ---------- -----------
Administrative
expenses -
continuing
operations (2,806) (14,166)
----------------------------- ------- ---------- -----------
Operating loss
- continuing
operations (692) (11,929)
Interest
receivable 39 -
Interest
payable and
similar
charges (1,313) (2,136)
----------------------------- ------- ---------- -----------
Loss on
ordinary
activities
before
taxation (1,966) (14,065)
Tax on loss on
ordinary
activities - 284
----------------------------- ------- ---------- -----------
Loss for the
financial
period (1,966) (13,781)
----------------------------- ------- ---------- -----------
Basic and
diluted loss
per 5p
ordinary share
(in US $) 1 (0.14) (0.99)
----------------------------- ------- ---------- -----------
AUDITED CONSOLIDATED BALANCE SHEET
At 30 December 2004
-------- ----------- ----------
Notes 30 Dec 2004 31 Dec 2003
US $'000 US $'000
---------------------------- -------- ----------- ----------
Fixed assets
Intangible assets - -
Tangible assets 519 481
Investments - -
---------------------------- -------- ----------- ----------
519 481
Current assets
Stocks 140 86
Debtors 2,447 1,136
Cash at bank and in hand 118 91
---------------------------- -------- ----------- ----------
2,705 1,313
Creditors: amounts falling due within one
year (including convertible loan stock) (12,246) (7,379)
---------------------------- -------- ----------- ----------
Net current liabilities (9,541) (6,066)
---------------------------- -------- ----------- ----------
Total assets less current liabilities (9,022) (5,585)
Provisions for liabilities and charges (55) (986)
---------------------------- -------- ----------- ----------
Net liabilities (9,077) (6,571)
---------------------------- -------- ----------- ----------
Capital and reserves
Called up share capital 1,342 1,342
Share premium account 7,232 7,232
Merger reserve 1,947 1,947
Other reserve 60 -
Profit and loss account (19,658) (17,092)
---------------------------- -------- ----------- ----------
Total shareholders' deficit (9,077) (6,571)
3
---------------------------- -------- ----------- ----------
Represented by:
Equity shareholders' deficit (17,408) (14,842)
Non-equity shareholders' funds 8,331 8,271
---------------------------- -------- ----------- ----------
Total shareholders' deficit (9,077) (6,571)
---------------------------- -------- ----------- ----------
AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 30 December 2004
Notes Period Year ended
---------------------------- ------ ended 31 Dec 2003
30 Dec 2004 US $'000
US $'000 ---------
----------
Net cash
outflow from
operating
activities (2,377) (2,027)
Returns on investments and servicing of
finance
Interest paid (124) (38)
Interest
received 39 -
---------------------------- ------ ---------- ---------
Net cash
outflow from
returns on
investments
and
servicing
of finance (85) (38)
Taxation
refund - 133
Capital expenditure and financial investment
Purchase of
tangible fixed
assets (230) (118)
---------------------------- ------ ---------- ---------
Net cash
outflow for
capital
expenditure
and
financial
investment (230) (118)
---------------------------- ------ ---------- ---------
Net cash
outflow before
financing (2,692) (2,050)
---------------------------- ------ ---------- ---------
Financing
Issue of
preference
share capital 40 481
Issue of
preference
share warrants 60 -
Capital
element of
finance lease
payments - (19)
Increase in
borrowings 1,331 1,008
---------------------------- ------ ---------- ---------
Net cash
inflow from
financing 1,431 1,470
---------------------------- ------ ---------- ---------
Decrease in
cash (1,261) (580)
---------------------------- ------ ---------- ---------
CASH FLOW FROM OPERATING ACTIVITIES
Reconciliation of operating loss to net cash outflow from operating activities:
Period ended 30 December Year ended
--------------------------------- 2004 31 December
US $'000 2003
--------- US $'000
---------
Operating loss (692) (11,929)
Depreciation
charge 230 182
Goodwill
amortisation - 2,173
Goodwill
impairment - 7,606
Loss on sale
of fixed
assets - 17
(Increase)/dec
rease in
stocks (54) 84
Increase in
debtors (1,351) (212)
Increase in
creditors 421 553
Decrease in
provisions (931) (501)
--------------------------------- --------- ---------
Total net cash
outflow from
operating
activities (2,377) (2,027)
--------------------------------- --------- ---------
AUDITED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the period ended 30 December 2004
Notes Period ended Year ended 31 Dec 2003
---------------------------- ------ 30 Dec 2004 US $'000
US $'000 ---------
----------
Loss for the
financial
period (1,966) (13,781)
Currency
translation
differences on
net investment
in foreign
subsidiaries (600) (129)
---------------------------- ------ ---------- ---------
Total
recognised
losses for the
period (2,566) (13,910)
---------------------------- ------ ---------- ---------
AUDITED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS'(DEFICIT)/FUNDS
For the period ended 30 December 2004
Period ended 30 Dec 2004 Year ended
-------------------------------- US $'000 31 Dec 2003
---------- US $'000
---------
Loss for the
financial
period (1,966) (13,781)
Currency
translation
differences on
net investment
in foreign
subsidiaries (600) (129)
Net proceeds
from
non-equity
shares issued - 521
Net proceeds
from
non-equity
share warrants
issued 60 -
-------------------------------- ---------- ---------
Net increase
in
shareholders'
deficit (2,506) (13,389)
Opening
shareholders'
(deficit)/fund
s (6,571) 6,818
-------------------------------- ---------- ---------
Closing
shareholders'
deficit (9,077) (6,571)
-------------------------------- ---------- ---------
NOTES TO THIS PRELIMINARY ANNOUNCEMENT
1. The calculation of earnings per share is based on the loss of US $2.0 million
(2003: US $ 13.8 million) and on 13,990,342 Ordinary shares (2003:
13,990,342) in issue.
2. The financial statements have been prepared on the basis of the accounting
policies set out in the Group's statutory accounts for 2004.
3. The financial information set out above does not constitute the company's
statutory accounts within the meaning of section 240 of the Companies Act
1985. The 2004 figures are based on audited accounts for the period ended 30
December 2004. The auditors do not expect to issue a qualified report on the
statutory accounts which will be finalised on the basis of the financial
information presented by the directors in the preliminary announcement and
which will be delivered to the Registrar of Companies following the
company's annual general meeting.
4. The 2003 comparatives are derived from the statutory accounts for 2003 which
have been delivered to the Registrar of Companies and received an
unqualified audit report and did not contain a statement under the Companies
Act 1985, s237(2) or (3).
5. This statement will be made available online at www.freeplayenergy.com and
copies will be made available at the Company's registered office, 2 Stone
Buildings, Lincoln's Inn, LONDON WC2A 3TH.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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