Final Results
Forbidden Technologies PLC
13 June 2007
13 June 2007
Forbidden Technologies plc
Preliminary Results for the year ended 31 December 2006
Forbidden Technologies plc (AIM: FBT, 'Forbidden') has developed and is
marketing a powerful internet video platform, which is being used by
broadcasters, citizen journalists and consumers. Forbidden's video post
production platform, FORscene, is one the world's most advanced browser-based
applications.
• Sales of £131,535 (2005: £59,705)
• Loss for the year £785,188 (2005: £826,578)
• Year end net current assets £358,794 (2005: £967,098) comprising
primarily cash and liquid assets
• Placing of 500,000 shares to founder of Canadian distribution partner,
Formidable Technologies
• Loan agreement completed on 5 June with the Chairman and Chief Executive
providing a facility of up to £1 million, securing sufficient working
capital for the foreseeable future
• Customers now include BBC, ITV, corporates, charities and universities
• Discussions with major broadcasters in Canada
• Mr Paparazzi, the world's largest celebrity picture agency, is using
consumer version of FORscene on its newly designed website.
• Active promotion at conferences and a speaker at Broadcast Live, IVCA, IBC
2006, FTX West (Canada)
Vic Steel, Chairman, Forbidden Technologies, commented:
'Following good sales growth in 2006 and the visibility of the Company and
products being created this year, we are hopeful of a breakthrough to new
partnerships and customers in 2007 which can lead to the desired scale for the
Company.'
Enquiries:
Forbidden Technologies plc 020 8879 7245
Stephen Streater, Chief Executive
Greg Hirst, Business Development Director
Bell Lawrie (a division of Brewin Dolphin Securities Limited) 0141 221 7733
Nominated Advisor
Alan Stewart
College Hill 020 7457 2020
Corinna Dorward/Adrian Duffield
Chairman's statement
In the year to 31st December 2006, the seventh year of our development, the
Company recorded sales of £131,535 compared to £59,705 in the previous year.
Administrative expenses were £872,000 (£874,637) and the loss for the year was
£785,188 (£826,578).
At the year end the balance sheet showed £358,794 of net current assets
(£967,098) comprising primarily cash and liquid assets.
The movement in net funds for the year was an outflow of £516,293 (£729,984).
The higher sales level achieved in the year reflects, in part, the increased
number of pilot projects undertaken with the BBC in the first half and repeat
business from BBC and other broadcasters in the second half.
Strategy
We have continued with our strategy of focusing upon professional post
production in the broadcast market and on editing and publishing in the growing
consumer video market.
Our intention of developing a product in the intruder and fire security market
remains in our strategy but has not been pursued in the past year as the Company
has focused entirely on the broadcast and consumer market.
Progress
Part way through the year, at one of our regular strategy review meetings we
concluded that, if we are to achieve adequate scale in our chosen strategic
sectors, we would be unable to do so quickly enough within our existing
resources.
To achieve scale we need the reach and customer base that international
companies can provide. Therefore, we are seeking strategic relationships in
each of our two market sectors. To support this effort we have also widened our
geographic coverage, particularly in North America where we have appointed a
distributor, Formidable Technologies, based in Toronto, Canada.
We have actively been promoting awareness of the Company at major gatherings; in
Europe at IBC (Europe's biggest broadcaster convention) and at London's
Broadcast Live; in the USA at Video on the Net in San Jose, California and at
NAB (the biggest broadcaster convention in the world) in Las Vegas.
Being seen and being active at these functions has raised awareness of Forbidden
and its products and has enabled us to meet and discuss opportunities with some
world-scale players.
On a smaller note, a number of universities in North America have begun to teach
FORscene in their media schools thus turning out graduates who can take their
knowledge of FORscene into their working lives in post production.
In Canada, through our distributor, we are in discussion with two major
broadcasters and FORscene is being trialed by 9 Story Entertainment, a major
animation studio.
Following the Company's decision to simplify the FORscene pricing model we have
begun to convince more independent production companies in the UK to use the
product, particularly since the product benefits are now clearer and the
economic advantages are more easily understood.
Recently (June 2007) Mr Paparazzi, the world's largest celebrity picture agency
has chosen to use Clesh on its newly designed website. Consumers taking video
shots of celebrities are invited to upload footage onto their own Clesh
accounts, edit the shots and submit them to Mr. Paparazzi for saleability. Mr
Paparazzi then sells the user-generated videos to a variety of media and part of
the proceeds goes back to the consumer. That is the first wide-scale monetised
use of Clesh.
Corporate Finance
Loan Facility
At the end of the first quarter of 2007 the net assets of the Company fell below
half of the nominal value of the issued share capital. Under section 142 of the
Companies Act 1985, in this circumstance an Extraordinary General Meeting (EGM)
has to be called to consider what action, if any, should be taken to deal with
the situation.
Accordingly, an EGM was held on 22 May 2007 and it was concluded that no further
immediate action would be required, since the directors intended to make a loan
facility of up to £1 million available to the Company. A second resolution, to
increase the borrowing powers of the board up to a limit of £2 million was
agreed.
As you may have read from our press releases a loan agreement was completed on 5
June 2007 between the Company, Stephen Streater and myself providing a facility
of up to £1 million. This secures sufficient working capital for the
foreseeable future.
IFRS
The Board has recently considered whether or not to adopt International
Financial Reporting Standards (IFRS) for future accounting periods, being
optional to AIM listed companies which do not have to present group accounts.
The Board concluded that the UK GAAP remains appropriate to Forbidden as a
Company with a very transparent balance sheet and an absence of subjective
valuations of intangible assets.
Share placing
In December 2006 one of the founding shareholders of our Canadian distributor,
Formidable Technologies, purchased 500,000 new ordinary shares for 15p each from
the Company. The purchase was a welcome confirmation of confidence from our
active and energetic Canadian partner.
Board and Staff
There were no changes to the Board in 2006 and we welcomed one new staff member,
Peter Burns.
Our thanks are owed to the dedication and enthusiasm of our team in continuing
the development of our technology and the pursuit of commercial opportunities.
Prospects
Following good sales growth in 2006 and the visibility of the Company and
products being created this year, we are hopeful of a breakthrough to new
partnerships and customers in 2007 which can lead to the desired scale for the
Company.
Vic Steel
Chairman
Chief Executive's Review
Introduction
In 2006, Forbidden consolidated its strong offering in the broadcast market and
equipped its technology with appropriate interfaces for the consumer market and
the emerging market of Citizen Journalism.
Forbidden's customers worldwide include major broadcasters, with products being
acknowledged as providing practical solutions. This is reflected in the tone of
press and internet coverage. The market is starting to understand FORscene.
Video on the web is catching on. As broadband continues to expand in coverage
and speed, video looks set to dominate its new medium.
The World's infrastructure
FORscene is a service. It has minimal cost of capital or distribution as it runs
in a web browser. The world's infrastructure it depends on continues to improve
in leaps and bounds.
On the client side, broadband is getting faster and more common, and people's
computers are better than ever. We now use client computers for demonstrations.
On the server side, we are benefiting from the falling cost of disk storage: a
5,000 hour server now costs us around £2,500 in components.
In the wider market, modern camera phones provide high quality video - ideal for
consumers and citizen journalists. And there are many website outlets for web
video.
The gap is in the middle. How to get from the original video content to the 5%
which is actually interesting - and to tell a story. FORscene for citizen
journalists, and Clesh for consumers, fill this gap.
FORscene
Forbidden's focus on FORscene paying off. We have been able to let our product
mature, making the refinements which can only come with real-life use. We have
not just added more features, we have also improved ease of learning and ease of
use, while maintaining the high degree of reliability which comes from a well
maintained web system.
Commercially, the new FORscene pricing model is a major advance. Our
understanding of usage patterns has enabled us to offer an 'all you can eat'
pricing which encourages new users within an organisation.
FORscene's main professional uses are reviewing, logging and editing. Our
end-to-end ingest once solution minimises wear and tear on source tapes -
FORscene outputs a broadcast quality rough cut for finishing on a high-end
machine. Integration with the Avid and Apple systems led to the first prime time
TV broadcasts of programmes made with FORscene.
Where mobile phones are used for filming, FORscene provides a complete post
production solution, including podcasting, web delivery and output for TV
broadcasts.
Forbidden's customers now extend from the BBC and ITV to charities, corporates
and universities.
Working as a Team
Making videos is a team effort. Producers, directors, editors, loggers, camera
men and clients all contribute. FORscene's foundation in the internet helps team
working considerably by being so accessible. The chat system, which includes
private chat rooms and technical support, also aids communication, making post
production more efficient.
The FORscene collaborative post production system offers to improve both price
and quality.
Clesh
The mass acceptance of internet video has left a gap for a high-end web-based
consumer product. To explore this market, in 2006 Forbidden launched Clesh (Clip
Load Edit Share), a storyboard version of FORscene for consumers.
Consumers edit their video for sharing with friends and family. There is a wide
variety of web services on the internet.
The Forbidden tool has many advantages. Its compression works well over variable
speed connections. Its intuitive interface is the result of many years of
experience, while its professional pedigree allows a depth which consumers will
appreciate as they build up more content and experience.
The advantages of the web-based approach are coming into focus: people can - and
do - log on from anywhere. Chat helps build a community, allowing sharing of
content and getting tips on how to make better videos.
Companies providing Clesh will also find relevant features, such as moderation,
are provided as standard.
Put simply, Clesh is the best tool around. It is a live system and is available
for licence for use in consumer websites around the world.
Promotion
Forbidden's main targets have been in Europe and North America. Forbidden
directors have given talks at shows both in the UK and abroad, including
Broadcast Live, IBC (who used it for news and citizen journalism) and IVCA.
These speaking opportunities have continued into 2007 with presentations at
Video on the Net, NAB and Broadcast Live.
Press coverage has continued as the FORscene product has become more
established.
Shareholder offer
Forbidden offers shareholders free accounts on FORscene. This allows users to
try out Forbidden's latest versions, and of course to make the odd internet
video for themselves.
Stephen Streater
Chief Executive
Profit and loss account
for the year ended 31 December 2006
Restated
2006 2005
£ £
Turnover 131,535 59,705
Administrative expenses before FRS 20 employee share option (872,000) (874,637)
cost
FRS 20 employee share option cost (101,884) (101,199)
Administrative expenses (973,884) (975,836)
Operating loss (842,349) (916,131)
Interest receivable and similar income 18,648 54,605
Loss on ordinary activities before taxation (823,701) (861,526)
Tax on loss on ordinary activities 38,513 34,948
Loss for the financial year (785,188) (826,578)
Basic and diluted loss per ordinary 0.8p share (1.04p) (1.09p)
The results stated above are all derived from continuing operations.
Balance sheet
as at 31 December 2006
2006 2006 2005 2005
£ £ £ £
Fixed assets
Tangible assets 5,063 9,729
Current assets
Debtors 94,912 172,592
Current asset investments 360,626 876,919
455,538 1,049,511
Creditors: amounts falling due within (101,807) (92,142)
one year
Net current assets 353,731 957,369
Net assets 358,794 967,098
Capital and reserves
Called up share capital 609,300 605,300
Share premium account 2,996,375 2,925,375
Capital contribution reserve 125,000 125,000
Profit and loss account (3,371,881) (2,688,577)
Shareholders' funds 358,794 967,098
Cash flow statement
for the year ended 31 December 2006
Restated
2006 2005
£ £
Reconciliation of operating loss to net cash outflow from
operating activities
Operating loss (842,349) (916,131)
Add back FRS 20 employee share option cost 101,884 101,199
Depreciation charges 14,791 25,541
Decrease/(increase) in debtors 18,767 (4,618)
Increase in creditors 9,665 19,353
Net cash outflow from operating activities (697,242) (774,656)
Cash flow statement
Cash flow from operating activities (697,242) (774,656)
Returns on investments and servicing of finance 18,648 64,130
Taxation 97,426 -
Capital expenditure (10,125) (19,458)
Cash outflow before management of liquid resources (591,293) (729,984)
Management of liquid resources 516,293 729,984
Financing 75,000 -
Increase/(decrease) in cash in the year - -
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash in the year - -
Cash outflow from decrease in liquid resources (516,293) (729,984)
Movement in net funds in the year (516,293) (729,984)
Net funds at the start of the year 876,919 1,606,903
Net funds at the end of the year 360,626 876,919
Reconciliation of movements in shareholders' funds
for the year ended 31 December 2006
Restated
2006 2005
£ £
Loss for the financial year (785,188) (826,578)
Add back FRS 20 employee share option cost 101,884 101,199
New share capital subscribed (net of issue costs) 75,000 -
Net reduction in shareholders' funds (608,304) (725,379)
Opening shareholders' funds 967,098 1,692,477
Closing shareholders' funds 358,794 967,098
Statement of total recognised gains and losses
for the year ended 31 December 2006
Restated
2006 2005
£ £
Loss for the financial year (785,188) (826,578)
Total recognised gain and losses relating to the financial year (785,188) (826,578)
Prior year adjustment (101,199)
Total gains and losses recognised since last annual report (886,387)
Notes
1. Basis of preparation
The preliminary announcement has been prepared using accounting policies
consistent with those set out in the financial statements for the year ended 31
December 2006.
In these financial statements FRS 20 'Share based payments' has been adopted for
the first time.
Prior year adjustment
FRS 20 'Share based payments' has led to the inclusion of a charge to profit in
the current and prior years representing the cost of issue of share options to
employees. The adoption of FRS 20 'Share based payment' has led to a charge of
£101,884 in the profit and loss account in the current year, along with a
restatement of prior period profit to include the corresponding charge of
£101,199. There has been no impact on the opening or closing profit and loss
account reserve for the 2005 and 2006 financial years.
The financial information in this preliminary announcement does not constitute
the Company's statutory accounts for the years ended 31 December 2005 or 2006.
The financial information for the year ended 31 December 2006 is derived from
the statutory accounts for that financial year. Those accounts have been
reported on by the Company's auditors and have been delivered to the registrar
of companies. The report of the auditors was unqualified and did not contain a
statement under section 237 (2) or (3) of the Companies Act 1985. The statutory
accounts for the year ended 31 December 2006 will be finalised on the basis of
the financial information presented by the directors in this preliminary
announcement and will be delivered to the registrar of companies following the
Company's annual general meeting.
The preliminary announcement for the year ended 31 December 2006 was approved by
the directors on 12 June 2007.
2. Earnings per share
Diluted earnings per share has not been presented, as including all potential
ordinary shares in the calculation would be anti-dilutive.
3. Basic earnings per share
The weighted average number of shares in issue during the year is 75,704,167
(2005: 75,662,500).
This information is provided by RNS
The company news service from the London Stock Exchange END
FR GUUBAQUPMGMP
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