RNS Number:7164V
Freeplay Energy PLC
30 April 2007
30 April 2007
Strictly Embargoed Until 0700
Freeplay Energy plc
("Freeplay", "the Group" or "the Company")
Preliminary Results for the period ended 31 December 2006
Freeplay Energy plc, the original and leading global brand of clean, dependable
energy products, announces preliminary results for the period ended 31 December
2006.
* Challenging year but good progress made in driving revenue
o Total group turnover of US $26.1 million (2005: US $3.1 million)
o Includes a five-month contribution of US $18.8 million from Dixie
Sales, following the acquisition in July 2006
o Turnover from continuing operations increased by 138% to US $7.3
million (2005: US $3.1 million)
* Acquisition of Barrett Marketing Group Inc. and Dixie Sales Company
Inc., its marketing and distribution subsidiary, completed on 20 July 2006;
Placing raised #2.3 million, net of expenses, to fund working capital and invest
in operations
* Significantly strengthened Board and senior management team with a
strong track record of technology and product development, combined with
expertise in distribution and logistics, improving Freeplay's distribution
capability worldwide
* A key focus for the year was to take control over Freeplay's routes to
market; direct retailer relationships set up in the US, Canada, Kenya, South
Africa and the United Kingdom
o New agreements signed with key retailers to supply product in 2007,
including:
* Discovery Stores, Gander Mountain, GI Joes and Eastern Mountain sports
in the US
* Mountain Equipment Coop and Tractor Supply Company in Canada
* Marks and Spencer, Maplins and Dixons (online) in the UK
* Cape Union Mart and Massmart - Builder's Mate in South Africa and
Nakkumat in Kenya
o Increased volume momentum for Freeplay Energy in 2006
* Continuing focus on looking for new opportunities and markets;
joint-venture signed in October with Narang Group, one of India's leading
industrial houses, to develop a range of bespoke products specifically for this
exciting market
* Aid and Humanitarian division continues to perform strongly, with an
excellent contribution from increased sales of the Freeplay Lifeline radio and
the launch of a new mid price multi band human and solar powered radio; since
year end secured single largest order ever from the Freeplay Foundation to
support aid work in South Sudan
Commenting on the outlook for 2007, Rory Stear, Executive Chairman, said:
"Freeplay remains focused on expanding its investments in operations and
business development initiatives in order to deliver further significant
improvements in contribution to operations during 2007 and beyond. The Board is
encouraged by the development of relationships established over the past 18
months and the channels available to the Group.
"Furthermore, the global shift in attitudes towards a heightened awareness of
environmental issues such as carbon emissions and climate change is encouraging
as it shows that the issue of sustainable energy is growing in importance and
forcing its way onto the political agenda. Freeplay Energy welcomes this trend
and believes that the company is uniquely well positioned to address the issue
of sustainable energy and to benefit from the stronger focus on socially
responsible, environmentally friendly, energy consumption."
- ends -
For further information, please contact:
Freeplay Energy plc 020 7851 2630
Rory Stear, Executive Chairman
Weber Shandwick Financial 020 7067 0700
Louise Robson or James White
Notes to Editors
Freeplay Energy plc is the original and leading global brand of clean,
dependable energy products. Freeplay Energy's clean, patented technology
harnesses human, solar and rechargeable energy and converts it into electricity
to power unique portable, consumer products replacing conventional disposable
battery-powered systems that are environmentally toxic and expensive. The
current product range includes radios, torches, lanterns, mobile phone chargers
and standalone foot powered generators. Freeplay Energy's "Lifeline" radio is
distributed throughout the developing world by The Freeplay Foundation
(www.freeplayfoundation.org) and other AID and Humanitarian organisations such
as Unicef and other United Nations' agencies. Further information about Freeplay
Energy plc and its products can be found at www.freeplayenergy.com.
Freeplay Energy - Best in the World, Best for the World
30 April 2007
Strictly Embargoed Until 0700
Freeplay Energy plc
("Freeplay", "the Group" or "the Company")
Preliminary Results for the period ended 31 December 2006
EXECUTIVE CHAIRMAN'S STATEMENT
I am pleased to present the results for Freeplay Energy plc for the period ended
31 December 2006.
2006 has proved to be a challenging but promising year for the Freeplay Group.
On 20 July 2006, the Company successfully completed the acquisition of the
Barrett Marketing Group Inc. ("BMGI") and its subsidiary, Dixie Sales Company
("Dixie") and a Placing of new shares, which raised US $2.3 million net of
expenses. The proceeds from the Placing have been used to fund the working
capital requirements of the Group and invest in operations.
Following the merger Freeplay now combines a team with a strong track record of
technology and product development and that has over 90 years of marketing and
operational experience, with Dixie's expertise in distribution and logistics
strengthening Freeplay Energy's distribution capability worldwide. It has also
enabled Freeplay Energy to use existing infrastructure to expand its systems
without incurring significant additional cost.
In addition, Freeplay Energy has taken direct control over its route to market
strategy in each of its core markets. There are now direct retailer
relationships in the US, Canada, South Africa and Kenya and in the United
Kingdom we have moved away from the exclusive two-step distribution
relationship. The Board continues to believe the Group remains a growth business
with strong momentum, indicated by the strong revenue growth seen during the
year. However, the results reflect the investments made in the year and the
Board's guidance given to the market in January 2007.
Whilst focusing on our core business, we are always looking for new
opportunities and markets, and we were particularly pleased with the signing of
a joint venture agreement with the Narang Group, one of India's leading
industrial houses, in October 2006. Working with Narang Group and benefiting
from their business leadership in India, we are using our product development,
manufacturing and marketing expertise to develop a range of bespoke products
specifically for this exciting market. In India we see significant potential for
using our market-leading products and relationship-based distribution model.
Financial results
For the period ended 31 December 2006, total Group turnover was US $26.1 million
(2005: US $3.1 million). These results include a five-month contribution of
US$18.8 million from Dixie Sales Company, following the acquisition of BMGI in
July 2006.
Turnover from continuing operations increased by 138% to US $7.3 million (2005:
US $3.1 million) and includes an increase of US $1.8 million in Aid &
Humanitarian sector sales, in particular sales of the Freeplay Lifeline radio
and the launch of a new mid price multi band human and solar powered radio.
Turnover from continuing operations in North America increased by US $1.9
million as a result of a full year's relationship with Dixie Sales Company, the
Group's North American distribution partner.
Gross profit increased to US $7.2 million (2005: US $1.1 million), with gross
profit from continuing operations increasing by US $1.1 million to US $2.2
million. Administrative expenses before goodwill amortisation and exceptional
item increased to US $12.1 million (2005: US $5.5 million), with administrative
expenses from continuing operations increasing by 20% as a result of increased
variable selling costs and the Group's investment in new staff, especially sales
staff in the UK, Africa and Aid.
The Group reported a decrease in operating loss to US $4.2 million (2005: US
$4.4 million) and the loss before taxation increased to US $4.7 million (2005:
US $4.5 million). The Group utilised tax credits of US $0.3 million bringing the
loss for the financial period to US $4.4 million (2005: US $4.3 million.
During the period, net debt increased by US $8.9 million to US $11.2 million
(2005: US $2.3 million). This includes US $6.3 million of debt acquired with the
acquisition of BMGI Group. On 20 July 2006, the Company issued 17,559,131 new
Ordinary shares of 5p each at an aggregate value of #5.1 million (US $9.5
million) in consideration for the acquisition of the entire issued share capital
of BMGI Group and issued 11,397,358 new Ordinary shares of 5p each, amounting to
an aggregate cash consideration of #3.3 million (US $6 million). The Group
currently has aggregate banking facilities of US $16 million, of which US $11
million relates to facilities available to Dixie Sales with PNC Bank and US $5
million available to Freeplay Energy with HSBC Bank plc. At 31 March 2007, the
Group had net debt of US $11.2 million.
Review of Operations
Freeplay Energy plc's operations are now split into two: Freeplay Energy and
Dixie Sales. These divisions are reported on separately below.
Freeplay Energy
During the period, Freeplay Energy made good progress in signing new agreements,
in particular with UNICEF, Nicco Industries in China and the Narang Group in
India where we established a joint venture, Freeplay Energy India Limited.
These agreements, together with our continued involvement with MIT's One Laptop
Per Child programme and the continued growth momentum in our core North America,
UK and Aid channels, are expected to underpin the Group's sales in 2007.
Although in-field product testing has been completed as part of the World Phones
agreement, we continue to await the first commercial order from them. The
agreement is an exclusive volume based distribution agreement primarily focused
on partnering Freeplay's FreeCharge human powered cell phone charger with World
Phones handsets in the rapidly expanding wireless market of sub Saharan Africa.
However, while we continue to work with World Phones, discussions with tier one
wireless operators in India and other developing world markets confirm our
optimism for this sector and we remain convinced that a significant medium and
long term opportunity is available to Freeplay Energy in this area. We are
moving rapidly to exploit these opportunities in India and Africa and continue
to be encouraged by the positive response to our FreeCharge product.
Product Development
Following on from the successful launches of consumer led new product
development during 2006, including the Indigo and Kito Lanterns, Freeplay Energy
continues to explore ways to expand the current product platforms. The Freeplay
Indigo lantern was awarded an Innovation award at the Consumer Electronics Show
in Las Vegas.
Freeplay Energy's medical products research and development programme is
ongoing. Significant progress was made in the development of the Texas
Instruments MSP430-based self-powered pulse oximeter (a device used to directly
measure the amount of oxygen in a patient's blood and changes in blood volumes
in the skin), as well as the foetal heart rate monitor, which included a novel
beat-to-beat variability function. External funding was put in place to pilot
manufacture the pulse oximeters for participation in existing field trial
programmes in Bangladesh and Papua New Guinea in 2007.
Freeplay maintained its relationship with MIT's One Laptop Per Child $100 laptop
programme throughout 2006 and has submitted several power solution options
whilst continuing to provide development support to the project for the
generation of electricity using human power.
The Group has initiated a research and development project for the provision of
light electrical current in rural Indian villages using animals to power the
energy source. The first field trials are expected in the second quarter of
2007.
Supply Base
Freeplay Energy has further diversified its production through five factories in
China to reduce reliance on a single provider. This has also allowed the
opportunity to increase production with stronger partners and there has been
some early success in achieving cost reductions and quality improvements.
Sales and Distribution
As highlighted in the Group's trading statement in January 2007, sales were
lower than originally anticipated as we await the first commercial order from WP
Phones.
Freeplay Energy turnover in North America grew to US $2.5 million (2005: US $0.6
million) reflecting the progress that has been made in securing key retail
accounts following the decision taken in 2005 to restructure the model adopted
for the region. Freeplay Energy continues to focus on further adding to these
key retail accounts and expanding our focus into Canada to drive revenue through
2007. We are pleased that Discovery Stores, GI Joes, Gander Mountain and Eastern
Mountain Sports in the United States and Mountain Equipment Coop and Tractor
Supply Company, in Canada, have agreed to supply our products in 2007.
We were encouraged by revenue growth of 8% in Europe, which was achieved despite
the shift away from two-step distribution relationship (the previous two-step
relationship involved selling to a distributor who in turn would sell to the
retailer. The new one-step relationship involves dealing directly with the
retailer). We remain optimistic for Freeplay Energy's prospects in the region
and are delighted to have secured agreements with Marks and Spencer, Maplins and
Dixons (on-line) to sell Freeplay products in 2007. However, we will continue to
focus on securing additional tier one retailers to complement these agreements
as well as our existing relationships with John Lewis and Argos in the United
Kingdom.
Our Aid and Humanitarian division achieved sales of US $2.3 million during 2006,
a significant increase on the US $0.4 million achieved in 2005. This was largely
attributable to the Long Term Supply Agreement with UNICEF signed in June 2006,
where Freeplay Energy is the supplier of Lifeline radios to UNICEF, and further
significant orders from the Freeplay Foundation. We are continuing to benefit
from a strong enquiry and order book.
We continue to develop our strategy of becoming a major provider of dependable,
clean energy in the developing world, where turnover increased by 16%, as we
explore the many opportunities that exist and select the most appropriate models
specific to these regions. Since the year end Freeplay Energy has negotiated to
exit the two-step distribution arrangement in South Africa and has begun
supplying the first tier one retailers, Cape Union Mart, and Nakkumat in South
Africa and Kenya respectively. It is important to remember that 35% of the
world's population have no access to electricity, while a further 35% have
intermittent access, so the potential markets for Freeplay Energy's products and
technology remain significant.
In recognition of Freeplay's work in delivering a range of wind-up, solar and
rechargeable energy products in the developing world, we were delighted to be
recognised as one of just nine companies as being a "Brand with a Conscience" in
2007 by the high-level think tank on global branding, the Medinge Group.
Freeplay Energy was cited for its "contribution to the betterment of society by
sustainable, socially responsible and humanistic behaviour" alongside co-winners
Product Red, IKEA and the Virgin Group.
Dixie Sales
Trading within Dixie Sales for the five months since acquisition was in line
with the Board's expectations. Dixie is continuing to focus on the high value
add segments of consumer direct, national retailer and fee for service while
pursuing opportunities to expand its existing product lines to optimise the
infrastructure already in place.
Operations
Dixie Sales, which was founded in 1914, is an established sales, marketing and
distribution company, providing a full range of services to its customers and
suppliers, including supplier account management, logistics, consumer call
centre services and technical services, such as training and education.
The core business, in addition to the distribution of the Freeplay range,
includes the sales and marketing of parts to the lawn and garden industry and
the distribution of goods such as scooters, quad bikes, go-karts and hand-held
lawn and garden equipment on behalf of manufacturers. These parts are sourced
from large manufacturers and distributed via private carrier or postal services
to customers throughout the USA and Canada. In addition, Dixie provides customer
care and repair centre network management to a number of its clients.
Sales and Marketing
Sales are completed through three main channels including an extensive dealer
network, national mass merchant retailers and direct to the consumer through its
use of its call centre and a newly redesigned web-site (www.ordertree.com).
Dixie successfully launched Husaberg, Gas Gas motorcycles and Philips consumer
electronics (Canada) in the 4th quarter of the year under exclusive distribution
agreements. This enabled Dixie Sales to deliver acceptable results for the
period while trading under difficult market conditions. A combination of harsh
economic and weather conditions in spring/summer 2006 resulted in soft overall
category performance. Early results for 2007 suggest a return to more normal
market conditions and results, and Dixie is trading in line with the Board's
expectations.
Our People
Through the acquisition of Dixie, Freeplay has significantly strengthened both
its Board and senior management team.
Peter Porteous, CEO of Dixie, was appointed chief executive of Freeplay Energy
and William and Edward Barrett and Stuart Kinney, Barrett Corporation General
Counsel joined as non-executive directors. Harold Reiter, President and COO of
Barrett Corporation, joined the Board as a non-executive director, but was
appointed as an Executive Director in August 2006. Rory Stear and Richard Court
continue as Executive Chairman and Finance Director respectively while Gordon
Roddick, Leonard Fassler and Andy Polansky continue to serve as non-executive
directors.
Baroness Chalker and John Hutchinson stood down as Directors at the time of the
acquisition of BMGI. I would like to take this opportunity to thank both of them
for the support they have given to Freeplay Energy since they were appointed to
the Board.
We welcomed the senior management team of Dixie to the Freeplay Group at the
time of the acquisition and the team is now fully integrated into the Group
allowing us to draw on their collective expertise in human resources,
information technology and operations, resulting in a stronger, better balanced
senior management team.
A key focus at Freeplay Energy has been on growing and supporting the Business
Development team to drive revenue. David Floyd, who joined as Business
Development Manager for Europe in February 2006, was appointed as Vice President
for Global Sales in February 2007. His remit is to lead the regional sales
managers to drive worldwide expansion. Mike Rounsavall was promoted to President
of Dixie Sales following completion of the merger. Richard Wharton was hired in
March 2007 as Sales Manager for the UK and Scandinavia. Operationally we have
successfully integrated several operating functions across the two units,
specifically Supply Base Management, Information Technology and Human Resources.
The Board would like to thank all members of staff for their continued
contribution to the progress the Company has made during this period of
significant change.
Post Year End Developments
Since the year-end, Freeplay Energy has continued to build momentum across the
entire business with both the Dixie Sales and Freeplay Energy units performing
in line with management's expectations.
The first quarter of 2007 has started well for the Dixie Sales operating unit
with a significant uplift in sales compared to the same period last year, partly
as an improvement in market conditions in the lawn and garden markets.
Opportunities to improve operating efficiency within the Dixie Sales unit
continue to be explored and warehouse consolidation is progressing as planned
with the inventory transfer from Orlando now complete. Following this
restructuring, Dixie Sales is now operating from two warehouse locations instead
of three, achieving significant cost savings whilst still delivering the same
standard of excellent service to our customers.
Since the year end, Freeplay Energy has seen significant momentum in retail
points of sale growth and has signed agreements with Marks and Spencer and
Maplins in the UK, Massmart - Builder's Mate in South Africa and Discovery
Channel, Gander Mountain and GI Joes stores in the US. At the end of the first
quarter of 2007, Freeplay products were available for sale in approximately
4,000 retail store's compared to approximately 1,000 for the same period in the
prior year. Freeplay Energy has also negotiated the exit of its two-step
distribution arrangement in South Africa and has begun supplying the first tier
one retailers, Cape Union Mart in South Africa, and Nakkumat in Kenya.
Existing customers continue to give excellent feedback on our wide range of
products and a number have confirmed that they intend to expand their current
product ranges. These include Cape Union Mart in South Africa who has added an
additional two products to their original 2007 product order and Target in the
United States who have confirmed that all three existing products will remain in
their stores for at least the duration of 2007. REI in the United States
continues to expand Freeplay Energy models and store distribution, resulting in
encouraging sales in the first quarter of 2007.
The Freeplay Energy operating unit has experienced lower global shipments in Q1
2007 compared to the same period last year but this is partly due to a change in
its distribution model in the UK and South Africa.
In India, field trials of our new lantern, aimed at displacing the Kerosene
powered hurricane lantern, continue to progress well and we expect to be ready
to take this product to market by the end of 2007. There has also been strong
interest in the FreeCharge product in India as the country continues to rapidly
expand its wireless network in rural areas where there is currently limited
electrical supply. Freeplay Energy India, the joint venture between the Narang
Group and Freeplay Energy, is working to pursue the commercial applications and
opportunities for this product in what is a very promising market.
Freeplay Energy's Aid & Humanitarian division continues to perform strongly and,
since the year-end, has secured the single largest order ever from the Freeplay
Foundation to support aid work in South Sudan. A major American donor is
sponsoring the project and the products are expected to be shipped to Sudan in
September 2007.
The Group has also worked hard to achieve significant brand exposure in 2007 and
is delighted to announce that Rory Stear, Executive Chairman, has been chosen by
the CNN Principle Voices Project as one of three "Principle Voices" for 2007 in
the Social Entrepreneur category, to raise awareness of energy poverty and other
major issues facing the world today. The project, backed by Fortune Magazine,
CNN and Time Magazine in association with Shell, aims to bring together a series
of renowned experts in a series of videos, articles and round table discussion
forums and will afford the Freeplay brand significant global exposure.
Outlook
The Board continues to believe that there is scope to deliver value for
shareholders from the two individual business operations. The acquisition of
BMGI. and its subsidiary, Dixie, has significantly strengthened the Group and we
are already benefiting from its sales and marketing expertise, particularly in
North America.
We remain focused on expanding our investments in operations and business
development initiatives in order to deliver further significant improvements in
contribution to operations during 2007 and beyond. The Board is encouraged by
the development of relationships established over the past 18 months and the
channels available to the Group. Furthermore, the global shift in attitudes
towards a heightened awareness of environmental issues such as carbon emissions
and climate change is encouraging as it shows that the issue of sustainable
energy is growing in importance and forcing its way onto the political agenda.
Freeplay Energy welcomes this trend and believes that the company is uniquely
well positioned to address the issue of sustainable energy and to benefit from
the stronger focus on socially responsible, environmentally friendly, energy
consumption.
Rory Stear
Executive Chairman
- Ends -
For further information, please contact:
Freeplay Energy plc 020 7851 2630
Rory Stear, Executive Chairman
Weber Shandwick Financial 020 7067 0700
Louise Robson or James White
Freeplay Energy plc
Consolidated profit and loss account for the period ended 31 December 2006
Period ended Year ended
31 December 30 December
2006 2005
US $'000 U S $'000
-------------------------------------------------------------------------------
Turnover - continuing operations 7,329 3,083
Turnover - acquisitions 18,779 -
--------------------------------------------------------------------------------
Total turnover 26,108 3,083
Cost of sales (18,939) (1,977)
--------------------------------------------------------------------------------
Gross profit 7,169 1,106
--------------------------------------------------------------------------------
Administrative expenses before goodwill amortisation
and exceptional item (12,048) (5,524)
Goodwill amortisation (364) -
Exceptional item 999 -
--------------------------------------------------------------------------------
Administrative expenses - continuing operations (5,968) (5,524)
Administrative expenses - acquisitions (5,445) -
--------------------------------------------------------------------------------
Operating loss - continuing operations (3,738) (4,418)
Operating loss - acquisitions (506) -
--------------------------------------------------------------------------------
Loss on ordinary activities before interest (4,244) (4,418)
Interest receivable and similar income 2 36
Interest payable and similar charges (491) (129)
--------------------------------------------------------------------------------
Loss on ordinary activities before taxation (4,733) (4,511)
Tax credit on loss on ordinary activities 365 212
--------------------------------------------------------------------------------
Loss for the financial period/year (4,368) (4,299)
--------------------------------------------------------------------------------
Basic and diluted loss per 5p ordinary share (in US$) (0.10) (0.22)
--------------------------------------------------------------------------------
There is no difference between the loss on ordinary activities before taxation
and the loss for the period stated above and their historical cost equivalents.
Freeplay Energy plc
Statement of group total recognised gains and losses
Period ended Year ended
31 December 30 December
2006 2005
US $'000 US $'000
--------------------------------------------------------------------------------
Loss for the financial period/year (4,368) (4,299)
Currency translation differences on
net investment in foreign subsidiaries 55 713
--------------------------------------------------------------------------------
Total recognised losses for the period/year (4,313) (3,586)
--------------------------------------------------------------------------------
Freeplay Energy plc
Consolidated balance sheet as at 31 December 2006
31 Dec 2006 30 Dec 2005
US $'000 US $'000
--------------------------------------------------------------------------------
Fixed assets
Intangible assets 7,834 -
Tangible assets 1,477 651
Investments - -
--------------------------------------------------------------------------------
9,311 651
Current assets
Stocks 10,203 838
Debtors 9,117 2,643
Cash at bank and in hand 353 325
--------------------------------------------------------------------------------
19,673 3,806
Creditors: amounts falling due within one year (17,597) (4,661)
--------------------------------------------------------------------------------
Net current assets/(liabilities) 2,076 (855)
--------------------------------------------------------------------------------
Total assets less current liabilities 11,387 (204)
--------------------------------------------------------------------------------
Creditors: amounts falling due after more than one year (1,101) (45)
Provisions for liabilities and charges (200) -
--------------------------------------------------------------------------------
Net assets/(liabilities) 10,086 (249)
--------------------------------------------------------------------------------
Capital and reserves
Called up share capital 6,608 3,936
Share premium account 29,028 17,052
Merger reserve 1,947 1,947
Other reserve 60 60
Profit and loss account (27,557) (23,244)
--------------------------------------------------------------------------------
Total shareholders' funds/(deficit) 10,086 (249)
--------------------------------------------------------------------------------
Represented by:
Equity shareholders' funds/(deficit) 10,086 (249)
Non-equity shareholders' funds - -
--------------------------- ----------------------------------------------------
Total shareholders' funds/(deficit) 10,086 (249)
--------------------------------------------------------------------------------
Freeplay Energy plc
Consolidated cash flow statement for the period ended 31 December 2006
Period ended Year ended
31 December 30 December
2006 2005
US $'000 US $'000
--------------------------------------------------------------------------------
Net cash outflow from outflow from
operating activities (6,580) (6,206)
Returns on investments and servicing of finance
Interest paid (483) (75)
Interest element of finance lease rentals payment (7) (1)
Interest received 2 36
--------------------------------------------------------------------------------
Net cash outflow from returns on investments
and servicing of finance (488) (40)
Taxation refund 321 212
Capital expenditure and financial investment (213) (291)
Acquisitions and disposals (6,709) -
-------------------------------------------------------------------------------
Net cash outflow before financing (13,669) (6,325)
--------------------------------------------------------------------------------
Financing
Issue of ordinary share capital 6,074 6,650
Expenses of share issue (850) (2,296)
New convertible loan stock - 2,819
Capital element of finance lease payments (16) (1)
Decrease in borrowings (77) (455)
--------------------------------------------------------------------------------
Net cash inflow from financing 5,131 6,717
--------------------------------------------------------------------------------
(Decrease)/increase in cash (8,538) 392
Freeplay Energy plc
Reconciliation of net cash flow to movement in net debt
Period ended 31 Year ended
December 30 December
2006 2005
US $'000 US $'000
--------------------------------------------------------------------------------
(Decrease)/increase in cash in year (8,538) 392
Movement in borrowings 77 455
Convertible loan stock - (2,819)
Finance lease payments 16 1
--------------------------------------------------------------------------------
Change in net debt resulting from cash flows (8,445) (1,971)
Loans and finance leases acquired with subsidiary (339) -
New finance leases (6) (55)
Other non-cash changes (86) 8,194
Net debt at beginning of year (2,290) (8,458)
--------------------------------------------------------------------------------
Net debt at end of period/year (11,166) (2,290)
--------------------------------------------------------------------------------
Freeplay Energy plc
Notes to the financial statements for the period ended 31 December 2006
1 Presentation of financial information
The financial information set out in this preliminary announcement does not
constitute the Company's statutory accounts within the meaning of section 240
of the Companies Act 1985. The 2006 figures are based on audited accounts for
the period ended 31 December 2006. The preliminary announcement is prepared on
the same basis as set out in the previous year's statutory accounts.
Statutory accounts for the year ended 30 December 2005, which were prepared
under accounting practices generally accepted in the UK, have been filed with
the Registrar of Companies. The auditors' report on those accounts was
unqualified and did not contain any statement under S237(2) or (3) of the
Companies Act 1985.
2 Exceptional item
During 2006 the Company reviewed the circumstances surrounding recognition of
a legal obligation that arose from a guarantee amounting to $999,000 provided
by Freeplay Energy Holdings Limited. As a result of a legal review the Company
determined that the series of transactions that gave rise to recognition of
the debt had lapsed.
3 Loss per share
Period Year
ended 31 ended 30
December December
2006 2005
US $'000 US $'000
--------------------------------------------------------------------------------
Loss for the financial period/year (4,368) (4,299)
Average number of ordinary shares in issue
(in thousands) 43,157 19,599
Basic and diluted loss per 5p (2005:5p)
ordinary share (in US $) (0.10) (0.22)
The calculation of the basic and diluted loss per ordinary share of 5p (2005:
5p) each has been based on the loss for the relevant financial period and on
43,157,101 shares (2005: 19,599,426). This represents the weighted average
number of ordinary shares in issue. The loss for the period and the weighted
average number of ordinary shares for the purposes of calculating the diluted
loss per share are the same as for the basic loss per share calculation. This is
because the outstanding share options would have the effect of reducing the loss
per ordinary share and therefore not dilute under the terms of Financial
Reporting Standard ("FRS") 22.
4 Reconciliation of operating loss to net cash outflow from
operating activities
Period ended Year ended
31 30
December December
2006 2005
US $'000 US $'000
--------------------------------------------------------------------------------
Operating loss (4,244) (4,418)
Depreciation charge 339 199
Goodwill amortisation 364 -
Exceptional item (999) -
Increase in stocks (218) (698)
Decrease/(increase) in debtors 650 (196)
Decrease in creditors (2,522) (1,038)
Increase/(decrease) in provisions 50 (55)
--------------------------------------------------------------------------------
Total net cash outflow from operating activities (6,580) (6,206)
--------------------------------------------------------------------------------
5 Group analysis of changes in net debt
31 31
December Cash flow Non-cash December
2005 US $'000 changes Acquisition 2006
US $'000 US $'000 US $'000
--------------------------------------------------------------------------------
Cash at bank
and in hand 325 28 - - 353
Bank overdraft (1,533) (8,566) - - (10,099)
--------------------------------------------------------------------------------
Net overdraft (1,208) (8,538) - - (9,746)
Debt due within
- Current portion:
long term debt - 14 - (119) (105)
- Other loans (1,028) (93) 999 - (122)
- Finance leases (9) 16 (14) (85) (92)
Debt due over one
- Promissory note - 156 (1,085) (98) (1,027)
- Finance leases (45) - 8 (37) (74)
--------------------------------------------------------------------------------
(1,082) 93 (92) (339) (1,420)
--------------------------------------------------------------------------------
(2,290) (8,445) (92) (339) (11,166)
--------------------------------------------------------------------------------
Non-cash changes noted above represent the write back of legal obligation, a
promissory note raised as part settlement for the acquisition of a subsidiary
and accrued finance and interest costs incurred during the period which have
been included within the carrying value of the amounts borrowed.
6 Reconciliation of movements in shareholders' deficit
Period ended Year ended
31 December 30 December
2006 2005
US $'000 US $'000
--------------------------------------------------------------------------------
Loss for the financial period/year (4,368) (4,299)
Currency translation differences on net
investment in foreign subsidiaries 55 713
Net proceeds from equity shares issued 14,648 4,354
Conversion of loans to equity shares - 8,060
--------------------------------------------------------------------------------
Net increase in shareholders' funds 10,335 8,828
--------------------------------------------------------------------------------
Opening shareholders' deficit (249) (9,077)
--------------------------------------------------------------------------------
Closing shareholders' funds/(deficit) 10,086 (249)
--------------------------------------------------------------------------------
7 Basis of preliminary announcement
The board of directors of Freeplay Energy plc approved the preliminary
announcement on 27 April 2007.
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.
The statutory accounts for the period ended 31 December 2006 will be delivered
to the Registrar of Companies following the Annual General Meeting. The
statutory accounts will be posted to shareholders shortly.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKOKPFBKDBQB
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