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Rest of WorldNews > Press Release:Freeplay Energy plc, Announcement of Proposed Placing and Admission to AIM
2005-02-15
Press Release - 2005-02-15Freeplay Energy Plc
("Freeplay", "the Company" or "the Group")
Announcement of Proposed Placing and Admission to AIM
Freeplay Energy plc today announces that it intends to raise approximately £3.5 million through a placing of new Ordinary Shares and is seeking admission to trading on AIM. This follows a £1.5 million private placing in January 2005 and completes a £5.0 million total fundraising.
Highlights
- Established in 1994, Freeplay has developed patented technology that enables exerted human energy to be captured, stored and delivered in an electrical form to power a range of electronic devices
- First applications include radios, torches and a mobile phone charger, with over 3.5 million units sold to date
- Freeplay believes it was first to market and commercialise self-powered technology and that it is recognized as a leading brand in this market for such products. Freeplay believes there are limited competitive offerings utilising technology which are less efficient
- Freeplay has a new product development plan which anticipates broadening the application of its technology into new product categories in 2005, 2006 and beyond
- In the developed world (which accounts for approximately 70% of the Group's projected sales), addressable markets include household, travel and outdoor segments, safety and security, marine and medical markets
- In the developing world, Freeplay supplies a number of programmes, financed by major aid and donor organisations such as the Red Cross and UN. Beyond the original Lifeline radio, there is also clear market for products such as water-filtration units, mobile phone chargers and medical devices
- Recent large-scale power outages in the US and Europe have increased public awareness for self powered technology, for which there is an increasing demand. Freeplay's technology has potential in any market where access to power is vital but not guaranteed
- Freeplay seeks to create, develop and supply the market for self-powered energy products internationally. This is being accomplished through both the establishment of its own products in the market, and the formation of strategic alliances with partners, aiming to combine compatible technology with market leadership. At the same time however, its IPR and know-how mean that it may be able to licence or whitelabel its technology to other brands as the market develops
- The net proceeds of the Placing available to the Company will principally be used for working capital requirements. The Directors believe that the Placing and Admission will ensure that the Company has sufficient resources to vigorously pursue its marketing plans for the US, the UK and Western Europe
- The Company is expected to be valued at around £10.8 million on flotation
For further information, please visit www.freeplayenergy.com or 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
Introduction
Freeplay Energy plc today announces that it intends to raise approximately £3.5 million through a placing of new Ordinary Shares and is seeking admission to trading on AIM. This follows a £1.5 million private placing in January 2005 and completes a £5.0 million total fundraising.
Established in 1994, Freeplay has developed patented technology that enables exerted human energy to be captured, stored and delivered in an electrical form to power a range of electronic devices. First applications include radios, torches and a mobile phone charger, with over 3.5 million units sold to date.
Freeplay seeks to create, develop and supply the market for self-powered energy products internationally. This is being accomplished through both the establishment of its own products in the market, and the formation of strategic alliances with partners, aiming to combine compatible technology with market leadership. At the same time however, its IPR and know-how mean that it may be able to licence or whitelabel its technology to other brands as the market develops.
Freeplay believes it was first to market and commercialise self-powered technology and that it is recognized as a leading brand in this market for such products. Freeplay believes there are limited competitive offerings utilising technology which are less efficient.
Freeplay has a new product development plan which anticipates broadening the application of its technology into new product categories in 2005, 2006 and beyond.
Business Model
The objective of the Company's business is to create shareholder value through meeting the commercial and humanitarian demand for self-powered energy products. The Directors believe that there are three key advantages to the Company's scaleable business model:
1. Outsourced Production - production is outsourced to manufacturers in China providing the Group with cheap, high quality finished goods;
2. Distribution Agreements - often involving a minimum annual order quantity guaranteeing transparent future revenues; and
3. Proprietary IPR and know-how - ensuring that the Group benefits from the IPR and know-how that has either been created in-house or jointly with other parties and which the Group continues to develop.
History
In April 1994, Chris Staines and Rory Stear began to develop and commercialise the technology of Trevor Baylis' wind-up radio following a feature on BBC1's Tomorrow's World programme.
In February 1996, the original wind-up radio (Freeplay's first commercial product) was manufactured and exported to the UK, Holland and Africa for the first time and subsequently to the US in May of the same year. Following interest in this initial product, the Freeplay brand was launched in September 1996. Since then substantial investment has been made into developing the products.
The Technology
Freeplay'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. The Directors believe that Freeplay is the world's only exclusive developer of these products, and that it remains at the forefront of technical developments. Since launch of the Group's first product, its wind-up radio, its technology has evolved from spring-based systems (1995), through to hybrid spring/direct charge systems (1998) to the current direct charge only systems supplemented by solar energy (2001). The Group holds a number of patents registered in Great Britain, Europe, North America and South Africa covering its spring based and hybrid technology and has applications pending related to its direct charge technology.
The Products
Radio - Consumer & Outdoors
Models include the Freeplay Ranger, Freeplay Summit , Freeplay Plus and the EyeMax (with light and with weatherband). These products will play for approximately twenty to thirty minutes (volume dependent) per forty-five second wind, and can be rewound at any time. The units can also be powered with its solar cells by sunlight, playing and charging simultaneously. The internal batteries can be fully charged via the solar panel or an AC/DC adapter, to give approximately twenty five hours' playing time once fully charged. Freeplay's range of radios are positioned both for the outdoors market and particularly in the US, for the emergency preparedness market. The radios are sold through stores specialising in the outdoors and sporting goods, DIY, department stores, consumer electronics and also through catalogues and on-line.
Radio - Humanitarian
Freeplay's Lifeline Radio is not sold in retail outlets but is available to aid and donor agencies, which range from UNICEF through to corporate sponsors such as Vodafone Group plc, for humanitarian broadcasting projects. The units can be powered by wind-up (direct charge) and solar power and have been designed and engineered to be highly robust for use in the harshest of rural conditions and climates. In certain markets the Lifeline Radio is available commercially in a cause-related offering. For example, in a project with a customer C. Crane Company, Inc. for every Lifeline Radio purchased by C. Crane Company, Inc. one Lifeline Radio is donated to the Freeplay Foundation for distribution to one of its humanitarian projects.
Torches
Current models include Sherpa, Jonta and Sherpa LED version. Approximately forty five seconds of winding gives from six minutes to 20 minutes of light, depending on the model. Recharging the torch via an AC/DC adapter allows for approximately five hours of light at normal brightness and thirty minutes at high brightness. The torches are designed for repeated and long-term use. These torches are sold in outdoors and sporting goods stores, DIY and department stores, as well as online, and through catalogues and automotive retailers.
Mobile Phone Charger
The Company has developed a mobile phone charger for the powering of major brands or series of mobile phones. These comprise a generic unit and customised front-end adapter. The internal battery can be charged via the alternator, or an AC/DC adapter, and energy can be stored in the charger itself to be supplied to the mobile phone when required. Approximately forty-five seconds of winding (direct charge) provides about three minutes of call time, and several hours of standby.
Standalone Foot Charger
Freeplay's foot charger is due to be launched commercially in the third quarter of 2005. It will deliver 12 volts of power to a wide range of appliances, including a main voltage inverter. Potential applications will include auto, marine, mobile homes, camping, military, medical and communication. The first market likely to be targeted is the US private marine market.
Markets
The Developed World
The developed world accounts for the majority (approximately 70 per cent.) of the Group's projected sales. Although there is a growing general awareness of energy issues and long-term constraints, this may not be the key driver for purchases at present and the principal markets for the Group's products are the outdoor and emergency preparedness markets, the latter of which has been boosted by incidents such as the power blackouts in the US and Europe during 2003 and 2004. The Group's products are designed to be highly resilient and durable, whilst maintaining consumer appeal as the gift market is regarded as a strategically significant proportion of the Group's business. As the majority of products can use mains or solar power recharging as well as human energy, they can compete directly with traditional radio/illumination product ranges on performance.
The Developing World
In the developing world and to date, Freeplay has primarily targeted Africa where access to electricity is limited. The Group's key product in the developing world/aid market is currently the Lifeline Radio, distributed globally by aid organisations, to support communications efforts in both emergency situations and ongoing education programmes. Beyond radios however, there are clearly further market opportunities open to the Group to deliver broader energy solutions. In the near term, with the roll-out of mobile phone networks strongly outpacing landlines, particularly in South Africa and Nigeria, the Directors believe that there is a significant potential for Freeplay's mobile phone charger product (the FreeCharge) which was relaunched in the fourth quarter of 2004. It is estimated that there are approximately fifty million mobile phone users on the African continent. It is currently envisaged that this market will be addressed via the relevant communication operators, with the potential to bundle the FreeCharge product with the mobile phone, in place of standard charger units.
The Group is also currently supporting trials for a number of resilient, hand-wound medical products, designed specifically for the developing world, where sophisticated medical electronic products are not frequently utilised to full effect owing to both power and complexity issues. Product development has been sponsored by the Sir Halley Stewart Trust. Products developed to date include a foetal heart rate monitor and a pulse oximeter and further products are planned.
Current Trading
| US$ | Unaudited results for the 12 months to 31 December 2003 | Unaudited results for the 6 months to 30 June 2004 |
| Turnover Gross profit Operating profit before goodwill PBT before finance charges | 6.3m 2.2m (2.1)m (11.9)m | 2.6m 0.75m (0.52)m (0.52)m |
Reasons for placing and Admission
The Company is proposing to raise approximately £3.5 million by way of the Placing. This follows a £1.5 million private placing in January 2005 and completes a £5.0 million total fundraising. The net proceeds of the Placing will principally be used to market the Group's products, acquire tooling for new products and upgrade tooling for certain existing products and the Group's working capital requirements. In addition, Freeplay intends to increase current stockholding, which will allow the Group to hold components and a small quantity of finished goods to increase supply flexibility and reduce the current eight-week order cycle. This, in turn, will enable it to respond quickly to unpredictable peaks in demand associated with natural disasters, such as blackouts and humanitarian crises.
A proportion of the Placing proceeds will also be used to boost marketing, including at the point of sale in key territories.
Freeplay Foundation
The Freeplay Foundation, which does not form part of the Group and has its own board of trustees, is run by Kristine Pearson, Rory Stear's wife. The Foundation is a fund-seeking organisation with tax-exempt status in the US, a non-profit organisation in South Africa and a registered charity in the UK.
The Freeplay Foundation is committed to providing innovative, affordable and practical energy solutions to ensure sustained access to information via radio. The Freeplay Foundation seeks new applications for Freeplay's wind-up and solar powered technology and makes those applications real and tangible, as evidenced in the Lifeline Radio.
After extensive fieldwork, the Freeplay Foundation believed there was an urgent need for a radio designed specifically for the humanitarian sector. The Lifeline Radio, developed by Freeplay, is a robust radio that can be operated easily by adults and children alike, heard by groups of up to forty and powered by either windup or solar-powered energy. Just twenty four months after the concept paper for the Lifeline Radio was written, the first radios were delivered to Burundian refugees living in refugee camps in Tanzania.
The Freeplay Foundation provides Freeplay with contacts and access to developing economies and their subsequent humanitarian requirements. The work of the Foundation in bringing communications to those with little means or infrastructure has been recognised by a number of the world's largest charities. This recognition has enabled Freeplay to sell a large number of its Lifeline Radios and is expected to provide a pipeline into this niche market.
The Foundation receives an annual donation from the Group of $150,000, shares certain administrative resources and the Group provides office accommodation for the Foundation. The Foundation uses the donation from the Group to fund its overheads whilst funds raised externally by the Foundation are used for designated projects carried out by the Foundation. In 2003 over $750,000 external funds were raised by the Foundation to fund humanitarian projects.
An example of such a project is Project Radio Rwanda to provide a Lifeline Radio for child-headed households. Ten years ago, it was estimated that over a million people were killed in Rwanda's 100-day genocide and the events of 1994 has been compounded by HIV/AIDS, leaving many children without parents. Project Radio Rwanda aims to give these children access to much needed information via the Lifeline Radio.
Donors of the Freeplay Foundation include the Vodaphone Group Foundation, Vodacom Foundation, Body Shop, Anglo American, NASDAQ, Rotary Clubs in Ireland and the UK and individuals of high net worth.
Working on a public-private sector partnership model, the Freeplay Foundation collaborates across sub-Saharan Africa with a variety of government ministries such as ministries of education, health, agriculture and labour; UN agencies including UNDP, UNICEF and UNHCR; international Non Governmental Organisations such as World Vision, PATH, CARE, Nelson Mandela Children's Fund, Red Cross and Green Belt Movement; and radio content providers such as Takalani Sesame, Soul Buddyz, Education Development Center and BBC World Service Trust.
Directors
Rory Stear, 45, Chairman and Chief Executive
Rory Stear has over twenty years of experience in corporate leadership, new business development and strategic planning. He co-founded Freeplay in 1994, and has been CEO since inception. Mr Stear was previously Managing Director of Seeff Corporate Finance (Pty) Ltd, a joint venture between him and a listed South African property group. He has been the recipient of various awards, including the Theodor Herzl Award for outstanding business achievement (2000), as well as being named as one of Business Week's Entrepreneurs of the Year 2000. Mr Stear is a fellow of the Schwab Foundation for Outstanding Social Entrepreneurs which is affiliated to the World Economic Forum. He has been a regular contributor to the Forum's events having made presentations at the Forum's annual meeting in Davos over the last three years. Mr Stear is also a member of both the Young Presidents Organisation and the Dean's Council at Harvard University's John F. Kennedy's School of Government.
Richard Court, 40, Finance Director
Richard Court has fifteen years experience in financial and general international management. Having qualified as a UK chartered management accountant in 1990 and been awarded fellowship in 1993, he worked for three years as financial controller of Quadrant Catering a division of the Post Office in the UK where he was responsible for the strategic development of financial systems. He has also worked as a divisional financial controller of Kwik Fit plc. He spent eight years as director of finance and operations with Periphonics Limited, a specialist computer hardware and voice driven software company which was brought to Nasdaq in 1995 and, later acquired by Nortel Networks. Having integrated Periphonics and a number of acquisitions into Nortels EBusiness Europe he spent a year in Nortel Network's Brazilian operation as CFO Brazil managing a significant downsizing. Mr Court joined Freeplay in 2004.
John Hutchinson, 52, Technology Director
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. Mr Hutchinson graduated with a degree in Engineering from the University of Cape Town in 1976, and has since acquired an MBA from the University of Cape Town. Prior to joining Freeplay, he spent 20 years in the manufacturing industry in South Africa. His career began with Barlow Rand Group, working with several start-ups, including in the bicycle and consumer electronics sector such as Justastart, Generentics Electronics, Superbikes and Western Flyer Cycles.
The Rt Hon Baroness Chalker of Wallasey, 64, Non-executive Director
Before entering Parliament in 1974, Baroness Chalker worked for Kodak Inc, Unilever Limited (Research), Shell Mex, British Telecom plc, Louis Harris International and Barclays Bank Limited. She was appointed a Life Peer in the House of Lords in 1992. Baroness Chalker returned to business in 1997 and joined the World Bank Africa team as an advisor. She formed her own consultancy, Africa Matters Limited, in 1998. Baroness Chalker was appointed as an advisory director of Unilever plc in 1998, and Chairman of its External Affairs and Corporate Relations Committee in 1999. She is also a non-executive Director of Group 5 (Pty) Ltd in South Africa, and of Ashanti Goldfields Company Limited. In 2001, she was appointed to the Presidential Advisory Council on Investment for Nigeria, and now leads the Council for President Obasanjo. Baroness Chalker joined Freeplay in 1997.
Leonard Fassler, 73, Non-executive Director
Mr Fassler is a founder, Director and Chairman of Vytek Wireless, Inc., a privately owned wireless company that has recently announced its merger with California Amplifier, Inc., a NASDAQ company. In 1999 Mr. Fassler co-founded Interliant, Inc., an internet web-hosting company and in 1992, co-founded and served as co-chairman of AmeriData Technologies, Inc., a New York Stock Exchange-listed IT company, acquired by General Electric Capital Corporation in 1996. Prior to AmeriData, Mr. Fassler was co-founder and cochairman of Sage Broadcasting Corp., a NASDAQ-listed company. Mr. Fassler holds a bachelor's degree in business administration from City College of New York and a law degree from Fordham Law School. Mr. Fassler has been associated with Freeplay for over five years.
Gordon Roddick, 62, Non-executive Director
Gordon Roddick co-founded The Body Shop with his wife, Anita Roddick, in 1976 as a one shop venture in Brighton. As Co-Chairman of The Body Shop, Gordon has devoted considerable energy to providing assistance to disadvantaged groups around the world, through the company's Trading with Communities in Need programme. Mr Roddick brought to the UK the idea of street newspapers and co-founded the Big Issue with John Bird. Mr Roddick joined Freeplay in 1999.
-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
-Disclaimer-
This press release, which has been issued by Freeplay Energy plc, has been approved by Charles Stanley & Co. Limited solely for the purposes of section 21 of the Financial Services and Markets Act 2000 of the United Kingdom. Charles Stanley & Co. Limited, which is regulated in the UK by the Financial Services Authority, is representing Freeplay Energy plc and no one else and will not be responsible to anyone other than Freeplay Energy plc for providing the protection afforded to customers of Charles Stanley & Co. Limited or for providing advice in relation to the admission to trading on AIM or any acquisition of securities.
No offer or invitation to acquire shares in Freeplay Energy plc is being made by or in connection with this announcement. Any such offer or invitation will be made solely by means of the prospectus to be published in connection with the proposed admission to trading on AIM of Freeplay Energy plc and any acquisition of shares should be made solely on the basis of the information contained in that document. The value of and the income from shares can go down as well as up. Persons needing advice should consult a professional adviser.
This announcement is not an offer of securities for sale or a solicitation of any offer to purchase securities in the United States of America, Canada, Ireland, South Africa, Japan or Australia. This announcement is not for distribution outside the UK, the Channel Islands and the Isle of Man nor to any US person as defined in Regulation S under the United States of America Securities Act of 1933. The distribution of this announcement in other jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities law of any such jurisdictions.