News > Press Release: Group Restructuring

Freeplay Energy plc
(“Freeplay”, "the Group" or “the Company”)

Group Restructuring

Freeplay Energy, the original and leading global brand of clean, dependable energy products, announces that it has commenced a restructuring programme to improve the performance of the Group and better position it for 2008 and beyond.

Following the acquisition of Barrett Marketing Group Inc. and its subsidiary, Dixie Sales Company (“Dixie Sales”), in July 2006, the Board of Freeplay Energy has focused on the integration of Dixie into the Group. The work surrounding the integration resulted in a review of the overall strategy of the Group and, consequently, a restructuring programme has commenced focusing on maximising the benefits of the acquisition and exploiting the synergies between the two divisions to reduce costs throughout the business. The restructuring programme will also see the Group exit certain non-core areas and consolidate sales operations where appropriate.

The planned changes will have no negative effect on the future growth of the business, with manufacturing, product development and sales functions remaining unchanged.

Good progress has already been made in the following areas:

• Approximately $1.5 million of cost-savings have been achieved to date, with the total reduction in Group overhead expected to be up to $4 million annually;
• Dixie will discontinue its motorcycle business unit, the distribution of Husaberg and Gas Gas products, with effect from 1 September 2007; and
• Dixie has consolidated its warehousing locations in the US from three to two with no impact on customer service levels.

As part of the restructuring plan, Freeplay has terminated its five-year agreement with World Phones to distribute the FreeCharge Mobile Phone Charger in Africa and the Caribbean region, signed in May 2006, as World Phones had not fulfilled its contractual obligations to Freeplay. Termination of this exclusive agreement will give Freeplay the opportunity to engage directly with these important markets, which it was precluded from doing under the terms of the World Phones agreement.

With effect from 1 July, 2007, Rory Stear, Freeplay Energy’s founder and current Executive Chairman, will become Chairman, with his primary responsibilities being to lead the company’s strategic planning, new market development, investor relations, and continue to be the face and the voice of the company.

Additionally, in order that the Board has the ability to incentivise staff and new employees in the Group, the Board will cancel 1,036,060 options over ordinary shares issued at 52 pence, which were initially granted on 24 February 2005, on admission of Freeplay to trading on AIM and due to expire from 24 February 2012 onwards. Future option grants for these individuals and other employees will be performance based and considered by the Board upon improved operating results.

The key focus for the Freeplay division will be to continue to drive revenue in its core markets of North America, the UK, continental Europe, Africa and India through innovative product development and leadership in the area of clean, dependable energy products. Dixie Sales’ strategy will be to maintain its core parts and equipment distribution business, whilst increasing the consumer direct, national retailer and fee for service components of the business.

Rory Stear, Chairman, commented:
“At the time of the Dixie acquisition, the Board decided that the enlarged Group should move forward for a period without significant restructuring, allowing for a detailed, dispassionate review process to take place. The board believes that the time is now right to restructure the Company in a systematic manner in order to achieve the Company’s vision of becoming a broad based, off the grid energy company. This process will not only significantly reduce costs but will also do so without impacting on our main focus, which is to grow sales strongly and continue to develop new products and technologies appropriate to our business.

“As a Company, we continue to be focused on, and are optimistic for, revenue growth for the Freeplay Energy division and profit growth for Dixie Sales. Investing for the future is key but it will be done sequentially and on the back of established momentum.”

Freeplay Energy is scheduled to release first half results a trading update and commentary on full year operating results on 5 September 2007.For further information, please contact:
Freeplay Energy plc                                                     020 7851 2630
Rory Stear, Chairman

Weber Shandwick Financial                                     020 7067 0700
Louise Robson or James White

Charles Stanley Securities                                        020 7739 8200
Mark Taylor

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.

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