News > Press Release:Trading Update

2005-12-23
Press Release - 2005-12-23

Trading Update
Freeplay Energy plc, the sustainable energy company that captures, stores and delivers electric power to self-powered devices such as radios, torches and mobile phone chargers, gives an update on trading for the year ended 31 December 2005.

Freeplay has had to recall its FreeCharge portable energy source, Weza, first orders of which were originally due to be shipped during the last quarter of 2005. This arose as a result of problems with components supplied to the Company. Although these issues have been fully resolved, the Board is now aware that the product will not be capable of despatch to the Company's distributors until January 2006, after the end of the current financial year. The Directors are confident that this one-off issue will not occur again.

Additionally, an electrical fault with Devo, the Company's portable DAB and FM radio, has been identified. The fault has been corrected for the 5,500 radios in the UK and these have been shipped to customers without impacting either the UK market or retailers. A further 4,500 radios have been returned to Hong Kong for a factory funded rework. It is now clear that it will not be possible to despatch these radios during the remainder of the current financial year and associated revenues will not therefore be recognised until the year ended 31 December 2006.

This delay in shipping product to customers will have a material adverse impact on the Group's revenues for the year ended 31 December 2005. Lower than expected sales in North America, arising from the board's post-IPO change in US strategy, which consolidated North American distribution into Dixie Sales, and the consequent rebuilding of North American distribution infrastructure, has compounded the situation. Whilst the Board anticipates that revenues in the second half will be materially ahead of the first half, the Board now expects that turnover for the year ending 31 December 2005 will be significantly below current market expectations. The resulting loss for the second half will be broadly in line with that reported in the first six months of the year.

Although implementation and integration of the marketing plan has been slower than anticipated, the Board is encouraged by the progress made by the Group's North American distributor, Dixie Sales, since its appointment in May 2005. Recent developments include achieving listings with major sporting and outdoor retailers and the appointment of commissioned sales representatives, increasing the opportunity to secure significant retail coverage for Freeplay's product range. Sales, albeit off a low base, have increased steadily every month during the second half of 2005.

The global market for sustainable and self-powered energy products continues to grow, as highlighted by the recent climate changes and high energy prices, which have created an increased awareness of Freeplay's products. Allied to this, the continued dramatic growth of mobile phone usage in the developing world validates Freeplay's strategy to focus on becoming a major energy provider to this sector in 2006 and beyond. In addition, the Group has significantly strengthened its business development team to better exploit the market opportunities that are available to it in North America and Europe, mobile telephony, African retail and aid and expects this to have a positive impact on sales during the coming year.

The number of new customers signed up and orders placed for the first quarter of 2006 in North America, the UK and Africa is already showing good progress year on year and the Group has not altered it's internal sales forecasts and profit projections for 2006. The Board remains optimistic for the overall outlook in 2006 and beyond.

-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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