14th Apr 2005 07:00
Forbidden Technologies PLC14 April 2005 Forbidden Technologies plc Preliminary Results for the year ended 31 December 2004 Forbidden Technologies has developed and is marketing a range of Internet videodistribution and editing products for a wide range of market segments andplatforms. Highlights • Sales of £76,788 (2003: £40,471). • Doubling of sales and marketing expenditure to £185,820 resulted in an increase in losses to £614,127 (2003: loss £476,843). • £1.68 million net current assets (2003: £2.3 million). • Four key video markets focused on: o Professional post production o Consumer home editing and publishing o Mobile phone applications o Intruder and fire security • Developing relationships with leading broadcasters (including BBC and GMTV), production companies (including Mentorn) and facilities houses (including NATS). Vic Steel, Chairman Forbidden Technologies, commented: "We are approaching a key milestone in our development of our portfolio ofproducts as the associated technology aligns with customers needs. Videoproduction houses need a remote editing capability which we are providing withFORscene, our flagship product. Consumers will soon be able to edit online fromtheir homes and distribute compressed video to mobile phones. "We are increasingly confident that the past five years of technologicalinnovation and development will lead to attractive returns as larger customersbegin to adopt and expand their use of our state-of-the-art solutions." 14 April 2005 Enquiries: Forbidden Technologies plc 020 8879 7245 Stephen Streater, Chief Executive Greg Hirst, Business Development Director College Hill 020 7457 2020 Corinna Dorward/Adrian Duffield CHAIRMAN'S STATEMENT Results In the year to 31 December 2004, the fifth year of our development, the companyachieved sales of £76,788, compared with £40,471 in the previous year. Wedoubled our expenditure on our sales and marketing activities as our innovativeproducts become ready for full commercial exploitation. This resulted in anincrease in the company's loss to £614,127 compared with £476,843 in theprevious year. Expenditure on sales and marketing increased from £92,856 to£185,820 in 2004. Consistent with previous years the company continued its prudent management ofresources, and has maintained a strong balance sheet with £1.68 million of netcurrent assets and liquid resources of £1.61 million. Strategy Following an in depth and detailed review of strategy, the Board has focused thedevelopment and sales and marketing activities upon four key market sectors forvideo: 1. Professional post production 2. Consumer (i.e. in-home) editing and publishing 3. Mobile phone applications 4. Intruder and fire security Each of the sectors utilises a number of the leading-edge technologicaldevelopments that the company has made over the past five years. Thesetechnologies enable Forbidden to offer superior performing, easy to use productsin very large market sectors. Marketplace Since its early days, Forbidden has been creating, developing and refiningtechnologies in anticipation of the emergence of markets dependent on widespreadavailability of such vehicles as higher speed computers, extensive coverage ofthe UK by broadband connections and mass take-up of 21/2G and 3G mobile phones. In 2005, these are all becoming of sufficient scale to provide meaningfulmarket opportunities for Forbidden to increase its penetration and exploitation. Current Programme a) Professional post production The response to our professional version of FORscene has been most encouraging. The company is now in the process of demonstration and negotiation with anexciting list of potential partners ranging from several BBC departments, GMTV,major production companies such as Mentorn, several post production facilitieshouses including NATS and a number of educational establishments. Potentialpartners have widely commented upon the potential cost saving advantage ofFORscene, its simplicity in use and the attraction of ongoing developments andupgrades, which are automatically available at no effort to the user. b) Consumer editing and publishing The company believes that there is a major opportunity to create a new, youngmarket using a simple version of FORscene for home use. This will enableshooters of home video to edit their own product easily and simply and thenpublish it to family, friends, work or school colleagues anywhere in the worldon mobile phones or on web sites. Forbidden expects to soft-launch this product in the second half of the currentyear. c) Mobile phones The application of Forbidden's technologies on mobile phones is attractingattention in conjunction with the FORlive product and the Viewtooth capability. The company is working to develop complete products with a range of potentialpartners in the UK and internationally. Potential partners range from a majorpharmaceutical company, a Finnish TV broadcaster, an Italian multi-mediacompany, a Canadian medical monitoring firm and the multi-media arm of a leadingtelecoms provider. d) Security Forbidden believes that the huge security market will develop from anaudio-based market dependent upon bells and sirens to one where video willdominate and be used widely to monitor homes and business in order to preventlosses by fire and intruders. The company has developed a working prototype of such a product and has recentlysigned an agreement to licence it, for sales and marketing implementation, to anInternet based security company. In addition, Forbidden is in discussion withother potential partners in traffic and other surveillance areas. Beta testingof the security product is planned for the second half of 2005. Board and staff As we announced last year, our Finance Director Douglas Blaikie retires thisyear. I would like to thank him for his contribution over the last five years. During the year, we added another full time member to our technical team, andemployed a Sales Manager with experience in the video editing market, who joinedus at the beginning of 2005. Prospects As outlined above, the company has generated a wide level of serious interest inthe strategic market sectors with the current product line-up. Accepting that innovative technology products take time to gain large scalecommitted customers, each sector has significant sales and profit potential.The Board is increasingly confident that the past five years of technologicalinnovation and development will lead to attractive returns to shareholders, aslarger customers begin to adopt and expand their use of Forbidden Technologies'portfolio of state-of-the-art solutions. CHIEF EXECUTIVE'S REVIEW Forbidden's position Forbidden Technologies stands on the shoulders of computer and technologygiants. These giants power the advancing installed base of CPUs (CentralProcessing Units), memory, discs, displays and internet connectivity of today'smodern PCs and mobile phones. To lay the foundations of our visionary positionin the new internet based video world, Forbidden Technologies had to understandand accurately predict multiple trends. Predictions we made five years ago Our long term product success relies on the successful outcome of predictions wemade five years ago: Java would become widely available. Even Microsoft has been unable to preventthe extremely high penetration of Java, on Windows PCs, Macs and Linux. Javaenables anyone with a modern computer to access Forbidden's software withoutinstalling any software. Broadband would have high penetration. A dramatic improvement in price andspeed has led to a surge in usage. This is a key development for Forbidden,whose products use the internet for video distribution. Internet access would become unmetered. Customers don't have to pay by theminute to be on the internet. When combined with broadband, this opens up theworld of data rich internet applications. The installed base of PCs would be increasingly high powered. Consumers'continuing willingness to upgrade their computers at their own expense hasaccelerated Forbidden's ability to deliver impressive products to standarddesktops. Mobile phones would become high performance. Gone are the small black and whitescreens. Modern handsets have colour screens, faster CPUs, 2.5G/3G internetconnectivity, and high memory. Devices which can run Forbidden's software arebecoming mainstream. Customers. Customers can take time to adopt new technology, and this is what weplanned for. Accessibility The key to Forbidden's product strategy is accessibility: • simple things are simple to do; • common things are quick to do; • minimal training is needed to use the product; and • the product is reliable. Open a web page containing Forbidden format content, and our Java technologysprings into action automatically. Simplicity itself. By the beginning of2004, Forbidden's powerful technology was already easily accessible to endusers. Forbidden spent 2004 creating our master tool to simplify content creation.FORscene combines our web and mobile publishing expertise with an intuitive,flexible and powerful editing front end. Anyone can access our complete editing and web/mobile publishing system from aPC, Mac or Linux computer through their web browser. There is no need toinstall hardware or software - customers have access their FORscene accountsfrom any computer. Market clarity Forbidden's new customers are helping us gain valuable insight. Our FORscenetools are well placed to tackle the professional video post production market,particularly in the areas of web/mobile publishing, client review, and off-lineediting (which typically covers the bulk of editing time). FORscene'ssimplicity allows directors and executive producers direct access to the editingprocess from their own PCs. Forbidden is proving a valuable strategicalternative supplier in a market currently occupied by US players. Exhibitions Forbidden again stepped up the level of promotion during the year. The launchof FORscene at the International Broadcasting Convention (IBC) caused quite astir. IBC also chose FORmobile to distribute IBC Television News. Thisindustry traditionally takes time to adopt new products, and Forbidden has beenactively promoting FORscene to interested parties. IFRS Forbidden Technologies plc will have the option to adopt IFRS in the financialstatements for periods starting on or after 1 January 2005. The Board has begunconsidering the differences between UK accounting standards and IFRS. We haveinitially identified accounting for share options and development costs as twoareas which could impact on our financial statements. Technology development Last summer, we gave FORmobile users the ability to forward videos (and theFORmobile application itself) from phone to phone for free using Forbidden's "Viewtooth" technology. This push technology complements the pull technology ofdownloading video over the internet. Just as FORscene unifies web and mobile publishing within an editing userinterface, our next video compression technology, under development sinceSeptember, will unify web, mobile and live compression under the FORscenebanner. Internet distribution Forbidden's visionary policy of making FORscene run in a web page makes itideally suited for internet distribution with electronic payment - and the massmarket. See below for demonstration web pages: http://www.forbidden.co.uk/demos/live/ shows live video from Forbidden's offices, http://forscene.net/guest/ lets you try out the latest version of FORscene for yourself. Shareholder offer Forbidden has benefited from shareholder feedback over the last year of FORscenedevelopment. We have increased the value of the shareholder offer this year toreflect the wider capabilities of FORscene and our increased capacity to serveit. This year, Forbidden's registered shareholders are being offered £1000.00of free credits. Shareholders can now actively participate in our vision. -------------- Profit and loss account for the year ended 31 December 2004 Note Unaudited 2004 2003 £ £ Turnover 76,788 40,471Administrative expenses (787,563) (664,071) Operating loss (710,775) (623,600)Other interest receivable and similar income 68,259 82,589 Loss on ordinary activities before taxation (642,516) (541,011)Tax on loss on ordinary activities 28,389 64,168 Loss for the financial year (614,127) (476,843) Basic and diluted loss per ordinary 0.8 pence share 2 (0.81p) (0.64p) A statement of recognised gains and losses has not been included as part ofthese financial statements as the Company made no gains or losses in the yearother than as disclosed in the profit and loss account. A note on historical cost gains and losses has not been included as part of thefinancial statements as the results disclosed in the profit and loss account areprepared on an unmodified historical cost basis. The results stated above are all derived from continuing operations. Balance sheet for the year ended 31 December 2004 Unaudited 2004 2003 £ £ £ £Fixed assetsTangible assets 15,812 13,818 Current assetsDebtors 142,551 167,224Cash - 8,070Liquid Resources 1,606,903 2,196,848 1,749,454 2,372,142 Creditors: amounts falling duewithin one year (72,789) (84,981) Net current assets 1,676,665 2,287,161 Net assets 1,692,477 2,300,979 Capital and reservesCalled up share capital 605,300 603,800Share premium account 2,925,375 2,921,250Capital contribution reserve 125,000 125,000Profit and loss account (1,963,198) (1,349,071) Shareholders' funds - equity 1,692,477 2,300,979 Cash flow statementfor the year ended 31 December 2004 Unaudited 2004 2003 £ £ Reconciliation of operating loss to net cash outflow fromoperating activities Operating loss (710,775) (623,600)Depreciation charges 30,130 31,631Decrease/(increase) in debtors 27,163 (55,306)(Decrease)/ increase in creditors (12,193) 11,152 Net cash outflow from operating activities (665,675) (636,123) Cash flow statement Cash flow from operating activities (665,675) (636,123)Returns on investments and servicing of finance 68,882 152,965Taxation 25,277 24,599Capital expenditure (32,124) (31,185) Cash outflow before management of liquid resources (603,640) (489,744) Management of liquid resources 589,945 476,655Financing 5,625 33,750 (Decrease)/increase in cash in the year (8,070) 20,661 Reconciliation of net cash flow to movement in net funds (Decrease)/increase in cash in the year (8,070) 20,661Cash inflow from decrease in liquid resources (589,945) (476,655) Movement in net funds in the year (598,015) (455,994)Net funds at the start of the year 2,204,918 2,660,912 Net funds at the end of the year 1,606,903 2,204,918 Notes 1. Basis of preparation The preliminary announcement has been prepared using accounting policiesconsistent with those set out in the financial statements for the year ended 31December 2003. The financial information in this preliminary announcement does not constitutethe company's statutory accounts for the years ended 31 December 2003 or 2004.The financial information for the year ended 31 December 2003 is derived fromthe statutory accounts for that financial year. Those accounts have beenreported on by the company's auditors and have been delivered to the registrarof companies. The report of the auditors was unqualified and did not contain astatement under section 237 (2) or (3) of the Companies Act 1985. The statutoryaccounts for the year ended 31 December 2004 will be finalised on the basis ofthe financial information presented by the directors in this preliminaryannouncement and will be delivered to the registrar of companies following thecompany's annual general meeting. The preliminary announcement for the year ended 31 December 2004 was approved bythe directors on 13th April 2005. 2. Earnings per share Diluted earnings per share has not been presented, as including all potentialordinary shares in the calculation would be anti-dilutive. 3. Basic earnings per share The weighted average number of shares in issue during the period is 75,539,726(2003: 74,678,125). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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