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Rest of WorldNews > Press Release:Freeplay Energy plc ( AIM:FRE ), Preliminary Results for the period ended 30 December 2004
2005-05-16
Press Release - 2005-05-16Preliminary Results for year 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 $6.3million)
- 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)
- 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
"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 Officer
Weber Shandwick Square Mile 020 7067 0700
Susan Ellis, Nick Oborne, Rachel Taylor
Charles Stanley & Co 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.
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 worldís only exclusive developer of these products and remains at the forefront of this technology. It is the Directorís 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 Companyís 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 Companyís 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 Directorsí 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 Freeplayís 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.
Freeplayís 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 ëwind-upí 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 ñ 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 Freeplayís 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 Freeplayís technology and products from the outset. He leads a team of ten engineers and industrial designers, responsible for the advancement of Freeplayís 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.
Freeplayís 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 Groupís 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 Groupís sales until the second half and beyond, we are encouraged by the opportunities currently available to the Group and remain confident of Freeplayís 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 2004 US $'000 | Year Ended 31 Dec 2003 US $'000 | |
| Turnover - continuing operations Cost of sales - continuing operations | 6.302 (4.188) | 6.347 (4.110) | |
| Gross profit | 2.114 | 2.237 | |
| Administrative expenses before goodwill amortisation and impairment Goodwill amortisation Goodwill impairment | (2.806) - - | (4.387) (2.173) (7.606) | |
| Administrative expenses ñ continuing operations | (2.806) | (14.166) | |
| Operating loss ñ continuing operations Interest receivable Interest payable and similar charges | (692) 39 (1.313) | (11.929) - (2.136) | |
| Loss on ordinary activities before taxation Tax on loss on ordinary activities | (1.966) - | (14.065) 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 US $'000 | 31 Dec 2003 US $'000 | |
| Fixed assets Intangible assets Tangible assets Investments | - - 519 - | - - 481 - | |
| Current assets Stocks Debtors Cash at bank and in hand | 519 - 140 2.447 118 | 481 - 86 1.136 91 | |
| Creditors amounts falling due within one year (including convertible loan stock) | 2.705 (12.246) | 1.313 (7.379) | |
| Net current liabilities | (9.541) | (6.066) | |
| Total assets less current liabilities Provisions for liabilities and charges | (9.022) (55) | (5.585) (986) | |
| Net liabilities | (9.077) | (6.571) | |
| Capital and reserves Called up share capital Share premium account Merger reserve Other reserve Profit and loss account | 1.342 7.232 1.947 60 (19.658) | 1.342 7.232 1.947 - (17.092) | |
| Total shareholders' deficit | (9.077) | (6.571) | |
| Represented by: Equity shareholders' deficit Non-equity shareholders' funds | (17.408) 8.331 | (14.842) 8.271 | |
| Total shareholders' deficit | (9.077) | (6.571) |
AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
for the period ended 30 December 2004
| Notes | Period Ended 30 Dec 2004 US $'000 | Year Ended 31 Dec 2003 US $'000 | |
| Net cash outflow from operating activities Returns on investments and servicing of finance Interest paid Interest received | (2.377) - (124) 39 | (2.027) - (38) - | |
| Net cash outflow from returns on investments and servicing of finance Taxation refund Capital expenditure and financial investment Purchase of tangible fixed assets | (85) - - (230) | (38) 133 - (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 Issue of preference share warrants Capital element of finance lease payments Increase in borrowings | 40 60 - 1.331 | 481 - (19) 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 2004 US $'000 | Year ended 31 December 2003 US $'000 | |
| Operating loss Depreciation charge Goodwill amortisation Goodwill impairment Loss on sale of fixed assets (Increase)/decrease in stocks Increase in debtors Increase in creditors Decrease in provisions | (692) 230 - - - (54) (1.351) 421 (931) | (11.929) 182 2.173 7.606 17 84 (212) 553 (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 30 Dec 2004 US $'000 | Year ended 31 Dec 2003 US $'000 | |
| Loss for the financial period Currency translation differences on net investment in foreign subsidiries | (1.966) (600) | (13.781) (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 US $'000 | Year ended 30 Dec 2003 US $'000 | |
| Loss for the financial period Currency translation differences on net investment in foreign subsidiaries Net proceeds from non-equity shares issued Net proceedsfromnon-equity share warrants issued | (1.966) (600) - 60 | (13.781) (129) 521 - |
| Net increase in shareholders' deficit Opening shareholders'(deficit)/funds | (2.506) 6.571 | (13.389) 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, Lincolnís Inn,LONDON WC2A 3TH.