RNS Number:7215R
Freeplay Energy PLC
26 September 2005
Embargoed until 07.00 26 September 2005
Freeplay Energy plc (AIM:FRE)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
Freeplay Energy plc ("Freeplay", "the Group" or "the Company"), the sustainable
energy company that captures, stores and delivers electric power to self-powered
devices such as radios, torches and mobile phone chargers, announces interim
results for the six months ended 30 June 2005.
* Turnover at US $1.1 million (2004: US $2.6 million)
* Operating loss of US $2.1 million (2004: US $0.5 million)
* Lower revenues in first half largely due to change in accounting
treatment of revenue recognition from Dixie Sales Company, the Group's new
US distribution partner
* Second half trading has started well
* IPO funds being invested in developing the business for sales growth
- Sales-led distribution channels established in North America, Africa &
Europe
- Better than expected retail sales in Africa
- Orders for 10,000 DAB radios received in the UK
- New foot powered generator successfully launched
* Improving market conditions for sustainable energy products
Rory Stear, Chairman and Chief Executive, commented: "During the first half we
have focused on building first rate distribution channels, as evidenced by North
America and Africa. Our enlarged distribution network is already showing
considerable progress and the appointments we have made will directly affect the
second half of the current year, providing a strong foundation for significant
growth in 2006 and giving us a base to fulfil the Board's vision of building a
large sustainable energy company.
"The second half has started well and we are beginning to see sales from our
recent product launches and broadened distribution network."
For further information, please contact:
Freeplay Energy plc 020 7851 2630
Rory Stear, Chairman and Chief Executive
Weber Shandwick Square Mile 020 7067 0700
Louise Robson
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 26 September 2005
Freeplay Energy plc (AIM: FRE)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
The Board of Freeplay announces interim results for the period ended 30 June
2005. Since the beginning of the year the Group has focused its efforts on
developing the business to drive sales growth and this has involved new product
launches and development, the establishment of sales led distribution channels
and investment in operational management. The Directors believe that there is a
growing demand for sustainable self-powered energy products which underlines its
confidence in the Group's prospects in the next 18 months.
Financial Results
For the period ended 30 June 2005, turnover was US $1.1 million (2004: US $2.6
million). Like for like turnover in the UK and Continental Europe was strong and
increased by 16%, but decreased by 120% in North America as a result of the
change in our US distribution partner and by 33% throughout the rest of the
territories in which we operate. As reported at Freeplay's pre-close statement
in July, a change in accounting treatment, following the appointment of Dixie
Sales Company ("Dixie"), the Group's US distribution partner, had a negative
impact of approximately US $1.1 million on revenue in the first half. This is
because revenue is now recognised when product is shipped from Dixie rather than
previously where revenue was recognised when product was shipped from Freeplay.
Gross margins improved to 35.9% (2004: 28.7%). Operating costs in the first half
were US $2.5 million, which were in line with the Company's expectations.
Freeplay reported an operating loss of US $2.1 million (2004: US $0.5 million)
and a loss before taxation of US $2.1 million (2004: US $0.6 million). The basic
and diluted loss per share for the period was US $0.12 (2004: US $0.04).
During the period the Company issued #1.5 million (US $2.8 million) of
convertible loan stock, which converted into 3,605,769 ordinary shares on
flotation. At flotation Freeplay raised an additional US $6.7 million of which
US $2.5 million of directly attributable costs was debited to the share premium
account. In addition, US $5.2 million of debt held at 30 December 2004 was
converted into ordinary shares.
Proceeds were used to fund the first six months operations (US $2.1 million), a
reduction in trade and other liabilities (US $1.5 million) and an increase in
inventories (US $0.5 million). There was a reduction in debtors of US $1.0
million due to deferred listing costs capitalised at 30 December 2004. However,
this was offset by an increase in trade receivables (US $0.4 million), other
receivables (US $0.4 million) and prepayments for inventory (US $0.3 million)
and tooling (US $0.1 million) to be brought into use in the latter half of 2005.
At 30 June 2005, Freeplay had a net cash balance of US $0.7 million. Short term
receivables and the overdraft facility will provide the Company with funding
through 2005.
OPERATIONAL REVIEW
Product Development
The Group has made good progress with its product development plan and has now
brought to market all the new products as outlined at the time of the IPO. As a
result, the Freeplay product range has increased from four products at the
beginning of the year to 15 as at September 2005.
These new products include the world's first sustainably powered Digital Audio
Broadcasting (DAB) radio into the UK market. The response to this product has
been extremely strong with current orders standing at 10,000 units.
The Group has also launched the first sustainable foot powered generator with
enough power to start a car or a boat. The generator was launched this month
into the US and African markets and orders have already been received which are
expected to be delivered during the fourth quarter. These two products are
testament to the Group's research and development capabilities and demonstrate
the Group's capability in the self-powered energy market - primarily due to its
ability to harness power sources at optimum efficiency.
The Group has increased its range of illumination products from one to four,
with a fifth product, the Chimba Lantern, planned at the end of the year. Our
illumination products continue to enjoy success with consumers. We are
particularly pleased that the 20,000 unit Freecharge mobile phone charger sale
concluded in the first half has been delivered into Africa and we anticipate
further growth opportunities for such chargers in the African market.
Manufacturing
We have increased our manufacturing capability in China and now have
relationships with four factories compared with the original one factory at the
beginning of the year. This expansion in capacity has enabled Freeplay to take
advantage of the specialist manufacturing and technologically advanced
capabilities needed for its newer products and provides the Group with enough
capacity for its current growth plans, thereby reducing reliance on a single
provider.
Sales and Distribution
We have made strong progress in North America following the exclusive
distribution agreement signed with Dixie Sales Company in May. This has been
further cemented by appointing Dixie to be our distribution agent in Canada. As
well as understanding the Freeplay range, there is an added advantage in that
Dixie's existing relationships in Canada will be of particular benefit to our
products. We are hopeful for the Canadian market to make a contribution to our
fourth quarter results.
In Africa we have added two further distribution partners - Ubuntu in West
Africa and a further one in South Africa, Cadac - to bring our total
distributorships to four. The additional distributor in South Africa complements
our established distributor by offering products to the outdoor leisure and
camping markets. It is particularly pleasing that all four distributors have
placed orders in the current quarter.
Our Aid market in Africa continues to be a consistent performer although the
cycle of business does not follow any particular trading pattern. Whilst Aid
sales in the first half of 2004 were extremely buoyant, due to the cyclical
nature of this business trading in the first half of 2005 was quiet. However, we
are already seeing substantial opportunities in the Aid market for the second
half and are currently tendering for two significant contracts.
In Europe, the UK market has had a robust first half, with sales going well, and
orders already shipped or placed which have enabled us to fulfil our 2005
expectations for the UK market ahead of schedule. We saw the launch of DAB
radios in the second half and this is proving to be an extremely popular product
with 10,000 units delivered to date. We are continuing to see good sell through
of analogue radios, particularly through John Lewis and Argos, which we shipped
in the first half of the year. These sales are enabling us to increase our
market share in a declining market.
In Continental Europe, we have appointed two distributors to serve the Dutch and
French markets - Catter B.V. in Holland and ACT in France. We expect to ship
products to France in the third quarter and Holland in the fourth quarter of
this year.
People
During the period we have continued to strengthen the operational management
team, building on the appointments we made prior to the IPO. For example, the
growth we are seeing in Africa has been made as a result of the specific sales
hires in that business area, in particular, Jenny Kotze who joined Freeplay as
Business Development Manager Africa. We will continue to seek suitable new
candidates who will be able to work with us to grow the business.
Current Trading and Outlook
We are seeing a growing market for sustainable and self-powered energy products
as highlighted by the recent high energy prices and climate changes which have
created an increased awareness of Freeplay's products. Further, recent global
events have highlighted the need for emergency preparedness which we believe
will be a driver for sales of self-powered sustainable energy products.
During the first half we have focused on building first rate distribution
channels, as evidenced by North America and Africa. Our enlarged distribution
network is already showing considerable progress and the appointments we have
made will directly affect the second half of the current year, providing a
strong foundation for significant growth in 2006 and giving us a base to fulfil
the Board's vision of building a large sustainable energy company.
The second half has started well and we are beginning to see sales from our
recent product launches and broadened distribution network. The Board
anticipates that trading in the second half of the current financial year will
produce a small profit and that the loss before taxation for the Group will be
similar to that reported in the financial period ended 30 December 2004.
For further information, please contact:
Freeplay Energy plc 020 7851 2630
Rory Stear, Chairman and Chief Executive
Weber Shandwick Square Mile 020 7067 0700
Louise Robson
Charles Stanley & Co. Limited 020 7739 8200
Mark Taylor / Freddy Crossley
Freeplay Energy plc
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 30 June 2005
Notes For the six For the six For the
months months period
ended 30 ended 30 ended 30
June 2005 June 2004 Dec 2004
(Unaudited) (Unaudited) (Audited)
US $'000 US $'000 US $'000
------------------------------------------------------------------------------------------
Turnover - continuing operations 1,129 2,607 6,302
Cost of sales - continuing operations (728) (1,859) (4,188)
-------------------------------------------------------------------------------------------
Gross profit 401 748 2,114
Administrative expenses -
continuing operations (2,471) (1,268) (2,806)
------------------------------------------------------------------------------------------
Operating loss - continuing operations (2,070) (520) (692)
Interest receivable 11 38 39
Interest payable and similar charges (66) (144) (1,313)
------------------------------------------------------------------------------------------
Loss on ordinary activities before
taxation (2,125) (626) (1,966)
Tax on loss on ordinary activities - - -
------------------------------------------------------------------------------------------
Loss for the financial period (2,125) (626) (1,966)
------------------------------------------------------------------------------------------
Basic and diluted loss per 5p
ordinary share (in US $) 1 (0.12) (0.04) (0.14)
------------------------------------------------------------------------------------------
Freeplay Energy plc
CONSOLIDATED BALANCE SHEET
At 30 June 2005
30 June 2005 30 June 2004 30 Dec 2004
US $'000 US $'000 US $'000
(Unaudited) (Unaudited) (Audited)
-----------------------------------------------------------------------------
Fixed assets
Tangible assets 455 485 519
Investments - - -
-----------------------------------------------------------------------------
455 485 519
Current assets
Stocks 504 41 140
Debtors 2,640 1,204 2,447
Cash at bank and in hand 702 29 118
-----------------------------------------------------------------------------
3,846 1,274 2,705
Creditors: amounts falling due
within one year (including
convertible loan stock) (2,827) (8,737) (12,246)
-----------------------------------------------------------------------------
Net current assets / (liabilities) 1,019 (7,463) (9,541)
-----------------------------------------------------------------------------
Total assets less current
liabilities 1,474 (6,978) (9,022)
Provisions for liabilities and
charges - (250) (55)
-----------------------------------------------------------------------------
Net assets / (liabilities) 1,474 (7,228) (9,077)
-----------------------------------------------------------------------------
Capital and reserves
Called up share capital 3,936 1,342 1,342
Share premium account 16,956 7,232 7,232
Merger reserve 1,947 1,947 1,947
Other reserve 60 60 60
Profit and loss account (21,425) (17,809) (19,658)
-----------------------------------------------------------------------------
Total shareholders' funds /
(deficit) 1,474 (7,228) (9,077)
-----------------------------------------------------------------------------
Represented by:
Equity shareholders' funds /
(deficit) 1,474 (15,559) (17,408)
Non-equity shareholders' funds - 8,331 8,331
-----------------------------------------------------------------------------
Total shareholders' funds /
(deficit) 1,474 (7,228) (9,077)
-----------------------------------------------------------------------------
Freeplay Energy plc
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2005
For the six For the six For the
months months period
ended 30 ended 30 ended 30
June 2005 June 2004 Dec 2004
(Unaudited) (Unaudited) (Audited)
US $'000 US $'000 US $'000
-------------------------------------------------------------------------------------------
Net cash outflow from operating activities (4,066) (1,174) (2,377)
Returns on investments and servicing of
finance
Interest paid (35) (71) (124)
Interest received 11 38 39
-------------------------------------------------------------------------------------------
Net cash outflow from returns on
investments and servicing of finance (24) (33) (85)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (53) (97) (230)
-------------------------------------------------------------------------------------------
Net cash outflow for capital expenditure
and financial investment (53) (97) (230)
-------------------------------------------------------------------------------------------
Net cash outflow before financing (4,143) (1,304) (2,692)
-------------------------------------------------------------------------------------------
Financing
Issue of ordinary share capital 12,318 - -
Issue of preference share capital - 40 40
Issue of preference share warrants - 60 60
(Decrease) / increase in borrowings (5,680) 1,323 1,331
-------------------------------------------------------------------------------------------
Net cash inflow from financing 6,638 1,423 1,431
-------------------------------------------------------------------------------------------
Increase / (decrease) in cash 2,495 119 (1,261)
-------------------------------------------------------------------------------------------
Freeplay Energy plc
CASH FLOW FROM OPERATING ACTIVITIES
Reconciliation of operating loss to net cash outflow from operating activities:
For the six For the six For the
months months period
ended 30 ended 30 ended 30
June 2005 June 2004 Dec 2004
(Unaudited) (Unaudited) (Audited)
US $'000 US $'000 US $'000
-------------------------------------------------------------------------------------
Operating loss (2,070) (520) (692)
Depreciation charge 100 106 230
(Increase) / decrease in stocks (364) 45 (54)
Increase in debtors (193) (108) (1,351)
(Decrease) / increase in creditors (1,484) 39 421
Decrease in provisions (55) (736) (931)
-------------------------------------------------------------------------------------
Total net cash outflow from operating
activities (4,066) (1,174) (2,377)
-------------------------------------------------------------------------------------
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the period ended 30 June 2005
For the six For the six For the
months months period
ended 30 ended 30 ended 30
June 2005 June 2004 Dec 2004
(Unaudited) (Unaudited) (Audited)
US $'000 US $'000 US $'000
----------------------------------------------------------------------------------------------
Loss for the financial period (2,125) (626) (1,966)
Currency translation differences on
net investment in foreign subsidiaries 360 (91) (600)
----------------------------------------------------------------------------------------------
Total recognised losses for the period (1,765) (717) (2,566)
----------------------------------------------------------------------------------------------
Freeplay Energy plc
RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS / (DEFICIT)
For the six months ended 30 June 2005
For the six For the six For the
months months period
ended 30 ended 30 ended 30
June 2005 June 2004 Dec 2004
(Unaudited) (Unaudited) (Audited)
US $'000 US $'000 US $'000
-----------------------------------------------------------------------------------
Loss for the financial period (2,125) (626) (1,966)
Currency translation differences
on net investment in foreign
subsidiaries 360 (91) (600)
Net proceeds from equity
shares issued 7,085 - -
Conversion of loans to
equity shares 5,231 - -
Net proceeds from non-equity
share warrants issued - 60 60
-----------------------------------------------------------------------------------
Net increase / (decrease) in
shareholders' funds / (deficit) 10,551 (657) (2,506)
Opening shareholders' deficit (9,077) (6,571) (6,571)
-----------------------------------------------------------------------------------
Closing shareholders'
funds / (deficit) 1,474 (7,228) (9,077)
-----------------------------------------------------------------------------------
NOTES TO THIS INTERIM ANNOUNCEMENT
1. The calculation of earnings per share is based on the loss of US $2.125
million (for the six months ended 30 June 2004: US $0.626 million; for the
period ended 30 December 2004: US $1.966 million) and on 18,477,610 Ordinary
shares (for the six months ended 30 June 2004: 13,990,342; for the period
ended 30 December 2004: 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.
4. The 2004 comparatives are derived from the statutory accounts for the period
ended 30 December 2004 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
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