Final Results

RNS Number : 6171M

Forbidden Technologies PLC

27 May 2010

 



27th May 2010

Forbidden Technologies plc

(AIM: FBT)

("Forbidden" or the "Company")

FINAL RESULTS FOR THE YEAR TO 31^st DECEMBER 2009

 

Forbidden Technologies, the AIM quoted developer and marketer of a leading web-based video platform, is pleased to announce its Final Results for the twelve months to 31^st December 2009.  The Board has now adopted the International Financial Reporting Standards (IFRS) as its reporting format.

Financial Highlights

·      Increase in sales of 131% to £280,826 (2008: £121,199)

·      Reduction in loss after tax of 25% to £56,679 (2008:£76,401)

·      The Company issued 2,500,000 new shares at 10p a share, representing a 29% premium to the prevailing market price, together with 2,500,000 options with an exercise price of 12p per share, a 55% premium - raising over £300,000 in the year

Trading Highlights

·      Partnerships with substantial companies, including with BIM and Chyron

·      The Company is in serious discussions with several other international operators

·      Over 1 million hours of video has been processed through FORscene

·      The rapid growth in demand for professional web video is increasing the demand for high quality video from media web-sites.  FORscene is well placed to take advantage of this growth

Vic Steel, Chairman of Forbidden Technologies, commented: "The Board is encouraged that the sales in 2009 came largely from repeat business from existing customers, enhanced by the addition of increasing numbers of new customers in UK based post-production and facilities houses.  The trend is continuing in 2010.  

"Having developed a web-based video platform over several years before the market place was ready or able to use it to its advantage, we see increasing evidence of recognition that FORscene is a leading platform that has a very bright future.

"We continue to be fortunate in having high calibre, skilled and dedicated employees.  Their loyalty is a testament to their belief in the high potential of the Company."

-Ends-

For further information please visit www.forbidden.co.uk or contact:

Forbidden Technologies plc                     

Tel: [phone]

Stephen Streater, Chief Executive

Brewin Dolphin Investment Banking 

Tel: [phone]    

Neil Baldwin 

Nominated Advisor

Bishopsgate Communications                    

Tel: [phone]

Gemma O'Hara/Siobhra Murphy

[e-mail]

CHAIRMAN'S STATEMENT

I am pleased to present this, the eleventh annual report to shareholders of Forbidden Technologies since its flotation on the AIM market of the London Stock Exchange in February 2000.

Income Statement and Statement of Financial Position

In preparing the income statement and statement of financial position for the year ended 31st December 2009, the Board has now decided to adopt the International Financial Reporting Standards (IFRS) as the more appropriate reporting format for the nature of our business.  We believe this to be a timely change as we begin to move towards becoming a more global business, and that it makes it easier to compare our performance with similar businesses.

Whereas in the past Forbidden Technologies has written off to expenses the total cost of all research and development activities in the year in which they were incurred, under IFRS development costs are capitalised.  This has the effect of reducing development costs in the income statement and showing a commensurate increase on the statement of financial position for intangible assets and thus also increasing the level of net assets of the Company. In accordance with the requirements of IFRS the figures for 2008 have been restated in IFRS convention.

In the year to 31st December 2009 the Company achieved sales of £280,826 compared to £121,199 in the previous year, an increase of 131%.  Administrative expenses in the year to 31st December 2009 at £341,192 compared to £207,445 in the previous year.  An increase of £133,747, largely as a result of personnel increases in marketing, sales and R&D.

The loss after tax for the year to 31st December 2009 was £56,679 compared to £76,401 in the prior year.

The statement of financial position shows total equity and liabilities of £781,001 at 31st December 2009 compared with £398,256 at 31st December 2008.  During the 2009 year the Company issued 2,500,000 new shares at 10p a share, representing a 29% premium to the prevailing market price, together with 2,500,000 options with an exercise price of 12p per share, a 55% premium. Following partial option exercises, this resulted in an increase in cash resources of just over £350,000. The £1m loan facility provided by two of the directors (Stephen Streater and Vic Steel) was extended during the year until the end of 2011.  At 31st December 2009, £785,000 of this facility had been drawn down.

The Board is encouraged that the sales in 2009 came largely from repeat business from existing customers, enhanced by the addition of increasing numbers of new customers in UK based post-production and facilities houses.  The trend is continuing in 2010.  The improving rate of sales progress is apparent when looking at a three year bar chart.

Market Place and Strategy

In the 2009 annual accounts we identified four significant market opportunities:

·      Broadcast (including all post-production companies)

·      Professional web video

·      In-house video

·      Serious hobbyists

Our belief that the credit crisis and financial pressures would encourage broadcasters and post-production companies to adopt new web-based workflows appears to be well-founded. Customers are increasingly aware that FORscene "saves time and money", and increasing numbers of programmes are beginning to use FORscene.

The predicted rapid growth in demand for professional web video is now apparent as audiences and advertising move from broadcast TV to web, creating an expanding need for high quality video from media websites.  FORscene is well placed to take part in this growth.

Our strategy in 2009, continuing in 2010, has been to focus on the broadcast and professional web video markets, with in-house video and serious hobbyists remaining as longer-term opportunities.  These are not sectors in which we have yet applied significant resources.

To ensure scalability of the business we have been pursuing a strategy of forming partnerships with substantial companies who already operate and have many clients in markets relevant to FORscene.  BIM and Chyron are examples of this, and we are in serious discussion with several other international operators.  Scalability of our cloud-based platform has also been moved forward and it is described in more detail in the CEO's Review.  One indicator of scalability is the fact that we have already exceeded 1 million hours of video processed through FORscene.

During 2009 we increased our efforts to become more visible in the investor community.  We appointed Bishopsgate as our financial P.R. company and have established a regular output of press releases.  In addition, we have been the subject of analyst research reports by two different organisations.  We have also increased our involvement in relevant trade shows and conventions.

Outlook

It is difficult to convey the enthusiasm, confidence and optimism that is felt by all of us who are involved at Forbidden.  The increases in unsolicited enquiries about FORscene coming from different countries across the world indicate that awareness of our technology and its benefits are becoming widespread.  The scale of business under discussion or negotiation increases from month to month.  As a result we continue to see a very bright future and we sense that the opportunity to achieve scale is not too far away.

We continue to be fortunate in having high calibre, skilled and dedicated employees.  Their loyalty is a testament to their belief in the high potential of the Company.

Having developed a web-based video platform over several years before the market place was ready or able to use it to its advantage, we see increasing evidence of recognition that FORscene is a leading platform that has a very bright future.  Continuing development is a constant feature of our technical team, with the objective of being ahead of any competitors over the coming years and our sales and marketing team enjoy an increasing warm reception from potential customers.

Vic Steel

Chairman

CHIEF EXECUTIVE'S REVIEW

Introduction

There is an increasingly confident feeling at Forbidden Technologies.

Forbidden has developed, owns and now sells a leading video platform, FORscene. Since its launch in 2004, the infrastructure to supply reliable high bandwidth access has matured considerably. This is supporting the growing market for Internet based video storage and post-production services.

The FORscene platform is now part of the modern trend of Cloud Computing. Mastering the exacting requirements for professional video post-production in the Cloud is hard. We believe we are well ahead of potential competitors in developing the right solutions for this complex sector. Our focus has been on developing a more effective and efficient Cloud based solution - a service that is accessible from anywhere. Services such as Google's Cloud-based text editing are raising the profile of Cloud-based services; Cloud-based video services are now anticipated and FORscene meets this need.

Key positive factors for FORscene are:

* the growth of Cloud Computing

* its acceptance in broadcast television

* the rapid growth of professional web video

* its scaleability

* Forbidden's access to partners

* higher profile

* FORscene's technological foundations

* Forbidden's access to capital

Broadcast television

Broadcast globally is a $20Bn market. FORscene entered this market through review and logging functions. During 2009, FORscene moved up the value chain to include shot selection, rough cut editing - and even fine cut editing. As people move from traditional desktop systems into the Cloud, we expect FORscene use to continue to move up the value chain. Programmes for BBC, ITV, Channel 4 or Sky, Bloomberg and CNBC all benefit from the flexibility of FORscene workflows, and the savings in both time and money.

Professional web

In 2009, the UK became the first major market where web advertising revenue overtook TV advertising revenue. Advertisers and subscription websites need professional video to attach their brands to. The Cloud-based approach can produce video at the right quality - even without broadcast budgets. Most of the million hours of professionally shot content handled by FORscene has been for Web distribution.

Scaling up

FORscene use is starting to deliver economies of scale. Its system architecture is designed for high volume. Professional content has grown from 100 hours a week to over 10,000 hours a week with only a handful of extra Forbidden servers, and no additional support staff. FORscene's higher profile is self-perpetuating, generating more customers and more coverage. Our new large scale partnerships are promising new routes to market on a much larger scale than we have achieved to date.

Partnerships

Partnerships are playing an important role in opening up new markets for FORscene. Broadcast Interactive Media (BIM) now license FORscene to over sixty US television stations. We have integrated with Chyron's visionary Axis graphics system and we are assisting them with multiple US opportunities. Our adoption within SUNY and our close cooperation with TrueTube have given us exposure in the education market. The more recent Brightcove partnership is opening up opportunities in the web arena. Other partners are covered by NDAs.

Product profile

FORscene has seen a sharply higher profile in the industry press. Commercial and technology news articles have been supplemented with Forbidden sourced quotes in more general articles. Our website has largely replaced printed literature on Forbidden's active exhibition schedule. 2009 saw BETT (with TrueTube), NAB (with Chyron) and IBC (with IBC TV News, Chyron and with our own stand). This year so far we have exhibited at BVE 2010 (where I was also on the Cloud Computing panel) and NAB 2010 (with Chyron and our own stand supported by our fledgling US office). Third party discussion of FORscene in conference sessions has helped drive visitors to our stands. A sprinkling of specialist events around the world has also allowed us to show off our platform. Video endorsements from users and a FORscene page in the Sony XD-CAM brochure further illustrate industry acceptance.

Investor profile

Forbidden has been featured in Aimzine, Decision Magazine, and recently in Moneyweek and the Penny Sleuth. Our good relationship with the London Stock Exchange led to a stand at the AIM conference. An investor seminar, multiple internet TV appearances, the Growth Company Investor Show 2009 (where we used FORscene to make these videos: http://clesh.com/videos/list/gci2009) and analysts reports from PSQ and GE&CR led up to a very busy Master Investor Show 2010. Active use of RNS Reach has simplified following our progress.

Technical advances in the year

Forbidden has continued to build on FORscene's technological foundations. The aim has been to increase scale and functionality without increasing overall serving or support costs. More efficient server software, improvements in hardware and moving even more work to client machines has minimised the need for more servers. Improvements in reliability and user interface design (our navigation bar now has a European patent) have kept support calls to a minimum. New functionality has allowed us to maintain prices. FORscene has joined in industry trends, such as to tapeless production, widescreen and high definition (HD). FORscene now supports post-production of HD content entirely in FORscene. Multicam, with up to eight concurrent video streams, was launched at NAB 2010, showing the depth of Forbidden's Cloud technology.

Access to capital

Raising money at a premium in a credit crunch can be hard. So our placing at a 29% premium to the prevailing market price, with options at a 55% premium can be seen as a success. This has provided us with £250,000 from the placing and a further £109,800 from option exercises. Our institutional investor has provided both stability and liquidity in the market.

Clesh

Clesh (http://clesh.com/) is our consumer-friendly version of FORscene. We provide shareholders with free accounts so they can see Forbidden's technology in action - and have some fun making videos. Any questions can be answered over Clesh's built in chat system. This platform is a white label option for major websites wanting to add consumer generated video as core content.  A recent development of the platform is the integration of searchable metadata with the videos. This addresses one of the critical challenges for platforms such as YouTube: how to associate relevant advertising with video to enable efficient monetization of video content.

Staff

I would like to thank our staff for their significant contributions, commitment, reliability and flexibility. This has directly resulted in the high levels of innovation and service we provide our customers.

Stephen B Streater

Chief Executive

      STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2009

		2009	2008
	Notes	£	£
CONTINUING OPERATIONS
Revenue	2	280,826	121,199
Cost of sales		(30,170)	(23,027)
GROSS PROFIT		250,656	98,172
Other operating income	3	-	2,261
Administrative expenses		(341,192)	(207,445)
OPERATING LOSS		(90,536)	(107,012)
Finance costs	5	(2,519)	(5,292)
Finance income	5	115	1,583
LOSS BEFORE INCOME TAX	6	(92,940)	(110,721)
Income tax	7	36,261	34,320
LOSS FOR THE YEAR		(56,679)	(76,401)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		(56,679)	(76,401)
Earnings per share expressed
in pence per share:	8
Basic		(0.07p)	(0.10p)
Diluted		(0.07p)	(0.10p)

STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2009

		2009	2008	01.01.2008
	Notes	£	£	£
ASSETS
NON-CURRENT ASSETS
Intangible assets	9	381,748	177,983	-
Property, plant and equipment	10	17,882	19,746	2,175
		399,630	197,729	2,175
CURRENT ASSETS
Trade and other receivables	11	133,885	114,783	68,532
Tax receivable		36,261	34,320	36,297
Cash and cash equivalents	12	211,225	51,424	59,657
		381,371	200,527	164,486
TOTAL ASSETS		781,001	398,256	166,661
EQUITY SHAREHOLDERS'  EQUITY
Called up share capital	13	632,820	609,300	609,300
Share premium	14	3,275,655	2,996,375	2,996,375
Capital redemption reserve	14	125,000	125,000	125,000
Retained earnings	14	(4,112,205)	(4,066,816)	(3,976,136)
TOTAL EQUITY		(78,730)	(336,141)	(245,461)
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables	15	785,000	635,000	335,000
CURRENT LIABILITIES
Trade and other payables	15	74,731	99,397	77,122
TOTAL LIABILITIES		859,731	734,397	412,122
TOTAL EQUITY AND LIABILITIES		781,001	398,256	166,661

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2009

		2009	2008
		£	£
Cash flows from operating activities
Cash generated from operations	1	(87,651)	(141,315)
Finance costs paid		(7,810)	-
Tax paid		34,320	36,297
Net cash from operating activities		(61,141)	(105,018)
Cash flows from investing activities
Purchase of intangible fixed assets		(221,563)	(177,983)
Purchase of tangible fixed assets		(10,410)	(26,815)
Interest received		115	1,583
Net cash from investing activities		(231,858)	(203,215)
Cash flows from financing activities
Amount introduced by directors		150,000	300,000
Share issue		302,800	-
Net cash from financing activities		452,800	300,000
Increase/(Decrease) in cash and cash equivalents		159,801	(8,233)
Cash and cash equivalents at the beginning of year	2	51,424	59,657
Cash and cash equivalents at end of year	2	211,225	51,424

                                                                                                                   

NOTES TO THE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2009

1.     RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

	2009	2008
	£	£
Loss before income tax	(92,940)	(110,721)
Depreciation charges	12,274	9,244
Amortisation charges	17,798	-
Employee share option costs	11,290	(14,279)
Finance costs	2,519	5,292
Finance income	(115)	(1,583)
	(49,175)	(112,047)
Increase in trade and other receivables	(19,102)	(46,251)
(Decrease)/Increase in trade and other payables	(19,374)	16,983
Cash generated from operations	(87,651)	(141,315)

2.     CASH AND CASH EQUIVALENTS

The amounts disclosed on the cash flow in respect of cash and cash equivalents are in respect of these balance sheet amounts:

Year ended 31 December 2009
	31/12/09	1/1/09
	£	£
Cash and cash equivalents	211,225	51,424
Year ended 31 December 2008
	31/12/08	1/1/08
	£	£
Cash and cash equivalents	51,424	59,657

 

END

 

 

FR PGUQWAUPUPUQ