News > Press Release:Pre-Close TradingUpdate

Press Release - 2005-05-16

Pre-Close TradingUpdate-Amend
Freeplay Energy, the technology company that captures, stores and delivers electric power to self-powered devices such as radios, torches and mobile phone chargers, announces its pre-close trading update for the 26 week period ended 30 June 2005.

Trading
As highlighted at the IPO, sales in Freeplay products have historically been low in the first half of the year, with the majority of annual turnover being achieved in the second half. This trend has continued in this financial year. In particular the Groups aggressive new product role-out programme is not anticipated to deliver revenues until the second half of the year.

Following the appointment of Dixie Sales Company ("Dixie"), the Group's US distribution partner, revenue is now recognised when product is shipped from Dixie rather than previously where revenue was recognised when product was shipped from Freeplay. This change in accounting treatment will have an adverse impact of approximately $1.1 million on revenue for the 26 weeks to 30 June 2005. As a result the interim results for the 26 weeks to 30 June 2005 which will be significantly lower than reported in the prior-year.

Product Development
The Group is pleased to confirm that it is making good progress with its product development plan and now has 10 products available to be delivered into the market over the next 18 months. In particular, the EyeMax radio with light, the EyeMax radio with weatherband, and the flashlight range consisting of the Xray LED Flashlight and the Light Centre are all now being delivered into the major target markets. In addition, the FreeCharge foot powered generator is likely to be delivered into North America earlier than anticipated in August and our DAB radio product, for which we are already delivered pre-orders for 5,000 units, will be ready for the UK market in October.

Progress in African Market
Given the growth potential of the mobile phone market in Africa, the Group continues to focus on the significant opportunities that this presents and is making good progress in penetrating this market. Freeplay has concluded a 20,000 unit FreeCharge sale in Africa in the first half, including distribution of the original FreeCharge model and the FreeCharge Rapid which was launched during the first quarter. The Company has also entered into formal trials with Vodacom in the Democratic Republic of Congo and V-Mobile in Nigeria. The purpose of the trials is to prove that by supplying a reliable energy source for powering mobile phones the networks are able to supply more airtime.

Progress in US Market
Freeplay believes that the US market is key to the financial prospects of the Company and has been encouraged by the strong start made by its new US distribution partner Dixie. This partnership will enable Freeplay to maximise sales and distribution opportunities in North America and drive growth in the second half of the year.

Dixie have already received initial enquiries in connection with new products and firm indications of interest in processing orders. Currently, several discussions are being undertaken with major US retail groups, which if successful, could lead to significant orders over the next 12 months. However, the precise timing of these potential orders remains unclear and the uncertainty relating to the timings of these orders may have an impact on the financial performance of the Group in the current financial year. The level of orders and consequent sales in Q3 and Q4 to these US retail groups will be key to the Group meeting market expectations for this financial year.

Sales and Marketing Resource
The Company has been active in strengthening its sales and marketing resource and has made two new appointments in the period. Jerry Le Bow was appointed as a Consultant to manage the relationship with the Dixie. Jerry's background is in the consumer electronics industry and his extensive experience and excellent contact base will enable us to pursue other channels to market outside what Dixie can deliver.

Andy Law joins us, also as a Consultant, to define our brand positioning and drive initiatives in marketing. Andy is very well known within the UK advertising industry. He founded the St Luke's advertising agency and is Chairman and co-founder of the Law & Kennith agency.

All appointments have been made on the basis that the individuals are largely remunerated on a success basis only.

Rory Stear, Chairman and Chief Executive commented:
"Our successful IPO in March 2005 has enabled us to exploit opportunities and deliver a diverse and highly saleable product portfolio. Most of the infrastructure is now in place to deliver good revenues moving forward. We are especially excited about opportunities in the US for our foot powered charger and opportunities in Africa for our mobile phone charger. The Directors believe that a strong demand exists for the new products and this, combined with the appointment of Dixie, underline our confidence in the prospects for the Group over the next 18 months in delivering its sales plan."

The Board expects to announce its interim results and trading update for the 26 week period to 30 June 2005 on Monday 26 September 2005.

-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 Energyís 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.

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