13th Jun 2007 07:01
Forbidden Technologies PLC13 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 ismarketing a powerful internet video platform, which is being used bybroadcasters, citizen journalists and consumers. Forbidden's video postproduction platform, FORscene, is one the world's most advanced browser-basedapplications. • 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 andproducts being created this year, we are hopeful of a breakthrough to newpartnerships and customers in 2007 which can lead to the desired scale for theCompany." Enquiries: Forbidden Technologies plc 020 8879 7245Stephen Streater, Chief ExecutiveGreg Hirst, Business Development Director Bell Lawrie (a division of Brewin Dolphin Securities Limited) 0141 221 7733 Nominated AdvisorAlan Stewart College Hill 020 7457 2020Corinna Dorward/Adrian Duffield Chairman's statement In the year to 31st December 2006, the seventh year of our development, theCompany 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 increasednumber of pilot projects undertaken with the BBC in the first half and repeatbusiness from BBC and other broadcasters in the second half. Strategy We have continued with our strategy of focusing upon professional postproduction in the broadcast market and on editing and publishing in the growingconsumer video market. Our intention of developing a product in the intruder and fire security marketremains in our strategy but has not been pursued in the past year as the Companyhas focused entirely on the broadcast and consumer market. Progress Part way through the year, at one of our regular strategy review meetings weconcluded that, if we are to achieve adequate scale in our chosen strategicsectors, we would be unable to do so quickly enough within our existingresources. To achieve scale we need the reach and customer base that internationalcompanies can provide. Therefore, we are seeking strategic relationships ineach of our two market sectors. To support this effort we have also widened ourgeographic coverage, particularly in North America where we have appointed adistributor, Formidable Technologies, based in Toronto, Canada. We have actively been promoting awareness of the Company at major gatherings; inEurope at IBC (Europe's biggest broadcaster convention) and at London'sBroadcast Live; in the USA at Video on the Net in San Jose, California and atNAB (the biggest broadcaster convention in the world) in Las Vegas. Being seen and being active at these functions has raised awareness of Forbiddenand its products and has enabled us to meet and discuss opportunities with someworld-scale players. On a smaller note, a number of universities in North America have begun to teachFORscene in their media schools thus turning out graduates who can take theirknowledge of FORscene into their working lives in post production. In Canada, through our distributor, we are in discussion with two majorbroadcasters and FORscene is being trialed by 9 Story Entertainment, a majoranimation studio. Following the Company's decision to simplify the FORscene pricing model we havebegun to convince more independent production companies in the UK to use theproduct, particularly since the product benefits are now clearer and theeconomic advantages are more easily understood. Recently (June 2007) Mr Paparazzi, the world's largest celebrity picture agencyhas chosen to use Clesh on its newly designed website. Consumers taking videoshots of celebrities are invited to upload footage onto their own Cleshaccounts, edit the shots and submit them to Mr. Paparazzi for saleability. MrPaparazzi then sells the user-generated videos to a variety of media and part ofthe proceeds goes back to the consumer. That is the first wide-scale monetiseduse of Clesh. Corporate Finance Loan Facility At the end of the first quarter of 2007 the net assets of the Company fell belowhalf of the nominal value of the issued share capital. Under section 142 of theCompanies 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 withthe situation. Accordingly, an EGM was held on 22 May 2007 and it was concluded that no furtherimmediate action would be required, since the directors intended to make a loanfacility of up to £1 million available to the Company. A second resolution, toincrease the borrowing powers of the board up to a limit of £2 million wasagreed. As you may have read from our press releases a loan agreement was completed on 5June 2007 between the Company, Stephen Streater and myself providing a facilityof up to £1 million. This secures sufficient working capital for theforeseeable future. IFRS The Board has recently considered whether or not to adopt InternationalFinancial Reporting Standards (IFRS) for future accounting periods, beingoptional to AIM listed companies which do not have to present group accounts. The Board concluded that the UK GAAP remains appropriate to Forbidden as aCompany with a very transparent balance sheet and an absence of subjectivevaluations 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 fromthe Company. The purchase was a welcome confirmation of confidence from ouractive 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 continuingthe development of our technology and the pursuit of commercial opportunities. Prospects Following good sales growth in 2006 and the visibility of the Company andproducts being created this year, we are hopeful of a breakthrough to newpartnerships and customers in 2007 which can lead to the desired scale for theCompany. Vic SteelChairman Chief Executive's Review Introduction In 2006, Forbidden consolidated its strong offering in the broadcast market andequipped its technology with appropriate interfaces for the consumer market andthe emerging market of Citizen Journalism. Forbidden's customers worldwide include major broadcasters, with products beingacknowledged as providing practical solutions. This is reflected in the tone ofpress and internet coverage. The market is starting to understand FORscene. Video on the web is catching on. As broadband continues to expand in coverageand 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 runsin a web browser. The world's infrastructure it depends on continues to improvein leaps and bounds. On the client side, broadband is getting faster and more common, and people'scomputers 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: a5,000 hour server now costs us around £2,500 in components. In the wider market, modern camera phones provide high quality video - ideal forconsumers and citizen journalists. And there are many website outlets for webvideo. 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 citizenjournalists, and Clesh for consumers, fill this gap. FORscene Forbidden's focus on FORscene paying off. We have been able to let our productmature, making the refinements which can only come with real-life use. We havenot just added more features, we have also improved ease of learning and ease ofuse, while maintaining the high degree of reliability which comes from a wellmaintained web system. Commercially, the new FORscene pricing model is a major advance. Ourunderstanding 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. Ourend-to-end ingest once solution minimises wear and tear on source tapes -FORscene outputs a broadcast quality rough cut for finishing on a high-endmachine. Integration with the Avid and Apple systems led to the first prime timeTV broadcasts of programmes made with FORscene. Where mobile phones are used for filming, FORscene provides a complete postproduction solution, including podcasting, web delivery and output for TVbroadcasts. Forbidden's customers now extend from the BBC and ITV to charities, corporatesand universities. Working as a Team Making videos is a team effort. Producers, directors, editors, loggers, cameramen and clients all contribute. FORscene's foundation in the internet helps teamworking considerably by being so accessible. The chat system, which includesprivate chat rooms and technical support, also aids communication, making postproduction more efficient. The FORscene collaborative post production system offers to improve both priceand quality. Clesh The mass acceptance of internet video has left a gap for a high-end web-basedconsumer product. To explore this market, in 2006 Forbidden launched Clesh (ClipLoad Edit Share), a storyboard version of FORscene for consumers. Consumers edit their video for sharing with friends and family. There is a widevariety of web services on the internet. The Forbidden tool has many advantages. Its compression works well over variablespeed connections. Its intuitive interface is the result of many years ofexperience, while its professional pedigree allows a depth which consumers willappreciate as they build up more content and experience. The advantages of the web-based approach are coming into focus: people can - anddo - log on from anywhere. Chat helps build a community, allowing sharing ofcontent 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 availablefor licence for use in consumer websites around the world. Promotion Forbidden's main targets have been in Europe and North America. Forbiddendirectors have given talks at shows both in the UK and abroad, includingBroadcast Live, IBC (who used it for news and citizen journalism) and IVCA. These speaking opportunities have continued into 2007 with presentations atVideo on the Net, NAB and Broadcast Live. Press coverage has continued as the FORscene product has become moreestablished. Shareholder offer Forbidden offers shareholders free accounts on FORscene. This allows users totry out Forbidden's latest versions, and of course to make the odd internetvideo for themselves. Stephen StreaterChief Executive Profit and loss accountfor the year ended 31 December 2006 Restated 2006 2005 £ £ Turnover 131,535 59,705Administrative expenses before FRS 20 employee share option (872,000) (874,637)costFRS 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 54,605Loss on ordinary activities before taxation (823,701) (861,526)Tax on loss on ordinary activities 38,513 34,948Loss 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 sheetas at 31 December 2006 2006 2006 2005 2005 £ £ £ £Fixed assetsTangible assets 5,063 9,729Current assetsDebtors 94,912 172,592Current asset investments 360,626 876,919 455,538 1,049,511Creditors: amounts falling due within (101,807) (92,142)one yearNet current assets 353,731 957,369Net assets 358,794 967,098 Capital and reservesCalled up share capital 609,300 605,300Share premium account 2,996,375 2,925,375Capital contribution reserve 125,000 125,000Profit and loss account (3,371,881) (2,688,577)Shareholders' funds 358,794 967,098 Cash flow statementfor the year ended 31 December 2006 Restated 2006 2005 £ £Reconciliation of operating loss to net cash outflow fromoperating activitiesOperating loss (842,349) (916,131)Add back FRS 20 employee share option cost 101,884 101,199Depreciation charges 14,791 25,541Decrease/(increase) in debtors 18,767 (4,618)Increase in creditors 9,665 19,353Net cash outflow from operating activities (697,242) (774,656) Cash flow statementCash flow from operating activities (697,242) (774,656)Returns on investments and servicing of finance 18,648 64,130Taxation 97,426 -Capital expenditure (10,125) (19,458)Cash outflow before management of liquid resources (591,293) (729,984)Management of liquid resources 516,293 729,984Financing 75,000 -Increase/(decrease) in cash in the year - - Reconciliation of net cash flow to movement in net fundsIncrease/(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 1,606,903Net funds at the end of the year 360,626 876,919 Reconciliation of movements in shareholders' fundsfor 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 101,884 101,199New share capital subscribed (net of issue costs) 75,000 -Net reduction in shareholders' funds (608,304) (725,379)Opening shareholders' funds 967,098 1,692,477Closing 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 policiesconsistent with those set out in the financial statements for the year ended 31December 2006. In these financial statements FRS 20 'Share based payments' has been adopted forthe first time. Prior year adjustment FRS 20 'Share based payments' has led to the inclusion of a charge to profit inthe current and prior years representing the cost of issue of share options toemployees. 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 arestatement of prior period profit to include the corresponding charge of£101,199. There has been no impact on the opening or closing profit and lossaccount reserve for the 2005 and 2006 financial years. The financial information in this preliminary announcement does not constitutethe 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 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 2006 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 2006 was approved bythe directors on 12 June 2007. 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 year is 75,704,167(2005: 75,662,500). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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