25th Apr 2006 07:02
Forbidden Technologies PLC25 April 2006 Forbidden Technologies plc Preliminary Results for the year ended 31 December 2005 Forbidden Technologies plc ("the company" or "Forbidden"), through itsproprietary technologies, has developed and is marketing a range of Internetvideo editing and sharing platforms for a wide range of market segments in thewired and wireless world. Chairman's Statement In the year to 31 December 2005, the sixth year of our development, the companyrecorded sales of £59,705 compared to £76,788 in the previous year.Administrative expenses were £874,637 (2004: £787,563) and the loss for the yearwas £725,379 (2004: loss of £614,127). At the year end the balance sheet showed £957,369 of net current assets (2004:£1.68 million) and liquid resources of £876,919 (2004: £1.61 million). The lower sales level is a reflection of the change in our business model fromthe licensing of individual copies of our compression software to organisationsputting video onto websites, to the delivery of logging and editing solutions totelevision post production teams. The increase in administrative expenses was almost entirely due to therecruitment of new staff. The balance sheet reflects the continuing tight control which is exercised overall costs in the company. Strategy In the annual report for the year ended 31 December 2004 the board outlined arevised strategy for the company and indicated key market sectors upon whichForbidden would concentrate: 1. Professional post production2. Consumer (i.e. in-home) editing and publishing3. Intruder and fire security To date these sectors have proven to be an appropriate selection. Mobile phoneapplications which we previously identified separately are now an integral partof each of our sector offerings. All three of these sectors are developed fromthe same core platform; FORscene. All gain from improvements in our dynamic R &D activities and our ability to enhance our products to meet our partners' andcustomers' individual needs. The pace of commercialisation in each sector has varied through the past year aswe have flexed our resource allocations to reflect the urgency and immediacy ofeach opportunity; however, the chosen strategic sectors remain our focus goingforward. Market place As predicted, 2005 saw significant growth of the key technologies and theirmarket penetration in the UK which are critical to the expansion of ourbusiness. Computers provided much increased storage capacity, broadbandconnections accelerated at a remarkable rate to a level today in excess of 10million homes and the typical broadband speed on new computers has gone from512Kbps to around 2Mbps. Broadband costs have come down from an average of £20+per month to the latest launch of free broadband 8Mb connection from CarphoneWarehouse. Picture quality on mobile phones has increased significantly. Thelatest models can now capture video at near VHS quality. All of these developments increase the potential sales revenues of the company'sproducts, since they are the pre-requisite conditions upon which our researchand development efforts have been based. Current Activities Professional post production The continuing development and refinement of FORscene has been our top priorityover the past six months. It has absorbed a high proportion of our R & D effortas interest and involvement of major broadcasters and partners has increasedmonth by month throughout the various pilots that have been taking place.Individual customer needs have been identified and satisfied. FORscene is a truly revolutionary product in the post production process ofprogramme creation and is described as 'disruptive technology' by experts in theindustry. In December 2005, Forbidden won the Royal Television Society award forthe best technology innovation in the post production process. The awardceremony was videoed on one of the new generation mobile phones, uploaded overthe air into FORscene, edited and published for web and mobile delivery. It canbe seen on our website at http://www.forbidden.co.uk/videos/rts/ . FORscene provides very high value by saving both significant time and money andsimplifying life for loggers, editors, producers and directors. More detail isprovided in the Chief Executive's Review in the next pages. Post production costs can represent 25% or more of total programme costs, and,as the hours shot increase for productions (partly driven by lower costs ofdigital footage), so the attraction of significant savings offered by FORsceneincreases. This is a world-wide market and is worth hundreds of millions ofpounds a year. Another example of the power of the FORscene platform is its use by the BritishArmy to publish frequent videos recording an expedition to Mount Everest. Thevideos can be downloaded onto mobile phones of interested parties and potentialarmy recruits as part of an Army recruitment drive. FORscene will also be used by IBC TV News at the International BroadcastingConvention in Amsterdam in September, providing a most appropriate exposure ofour mobile capability. Consumer editing and publishing Clesh is the consumer version of FORscene. You can sign up for Clesh at ourwebsite at http://info.clesh.com . The consumer use of video clips is soaring following the introduction ofinternet video sites such as Google Video and YouTube, where consumerscontribute and share their video content. A site such as YouTube in the USA has grown in 12 months to have 40 millionvideo clips per day viewed by its members, demonstrating the explosive potentialof the web as the primary medium for communication. Clesh was introduced to the UK market in early 2006 through a promotion withTiscali, the internet and broadband company. Consumers now have access to afree, basic account through the Clesh.com website. Forbidden believes that Clesh has the three key constituents to be able to takeits place in this explosion: a) Simplicity and accessibility: go to the web page and Clesh is thereb) It is cross-platform: it can be used on PC, mobile or video iPodc) The content is generated by the user and consumer: the more videos that people put into the system the more there is to view During the next year the strategic imperative for Clesh is to build our customerbase by attracting large groups of consumers to share their videos across theglobe. Intruder and fire security In the latter stages of the year, management took the decision to focusresources on the immediate opportunity for FORscene in the broadcast marketrather than an intruder and fire security product. However, the company intendsto use the FORscene platform to develop a competitive product in this largemarket, albeit at a somewhat later date than was anticipated previously. Board and staff During 2005 the board welcomed Phil Madden as Finance Director following theretirement of Douglas Blaikie. One sales person resigned to relocate abroad andtwo new employees joined the company. Our thanks are owed to the dedication, enthusiasm and skill of our team in allcapacities and it continues to be a pleasure to see such good product andservice output, consistently achieved. Prospects In the interim report for 2005 I indicated that the company had high confidencein significant sales expansion in 2006. This continues to be our view and ordersin the first quarter are significantly ahead of the first six months of theprevious year. If our expectations of the outcome of the various pilots andprojects with broadcasters are realised, our shareholders should begin to seesignificant change in the profile of the business. Chief Executive's Review Introduction In last year's review, I outlined some of the technical and market expectationswhich have been fulfilled since the Forbidden Technologies flotation. Forbiddenhas applied its technology in an increasingly focussed way as part of its planto create the video platform for the internet - FORscene. Internet video platform The internet is becoming a major force in video creation and distribution.Consider the features to expect in an internet video platform: • internet based - accessed through a web browser • no installation - can run on any / every computer • no configuration - easy to get up and running • low cost or free • simple to learn • cross platform editing - PC, Mac, Linux • cross platform publishing - Desktop, Mobile phone, video iPod • wide in scope: • reviewing • logging • editing • web publishing • mobile / iPod publishing • hosting • available in volume The year has seen a further expansion of FORscene's web and mobile publishingcapability and a major acceleration in the internet video editing tool. It willcome as no surprise that Forbidden's FORscene meets all the criteria above foran internet video platform. The professional video market To appreciate the focus of Forbidden's market entry strategy, it helps tounderstand the workflow in the professional video market. Video post production processes vary widely between productions. Video is shotusing video cameras, and is generally stored on tape. Some or all of thefollowing steps may then be carried out: • ingest - transfer of video into the system • review - look through source material and note what is there • log - add transcript / enable shots to be found simply during editing • shot selection - select shots / speech which might be useful • shot ordering - construct the story • rough cut - order the shots; trim to about the right length • possibly re-ingest tape for the offline • offline - make the programme, often at relatively low video quality • possible re-ingest tape for the online • online - finish the programme at top video quality for broadcast The strategy has been to introduce FORscene into the relatively simple earlystages of this process: ingest, review and log. As customers discover thebenefits of our intuitive web based solution, it is simple to move up the valuechain by just staying on the FORscene escalator a bit longer. In the few shortmonths since its first broadcast use, FORscene has already moved up to shotselection, shot ordering and rough cut. Both FORscene and the global IT infrastructure it runs on continue to improve.It is already possible to finish entire programmes with FORscene on web andmobile. Consumer video - Clesh Clesh is the consumer interface into the power of FORscene, with simplicity ofuse as the key priority. It allows consumers to experience the functionality andfeatures of FORscene to edit and share their own video and mobile phone footageon the Internet, through a home PC. The Internet is so cheap that we can makeour consumer version available for free. You can sign up for Clesh on ourwebsite at http://info.clesh.com/. As we upgrade the Clesh video library to allow users to submit their owncontent, Clesh will be an increasingly attractive one-stop shop for internetvideo. Higher volume users will be able to purchase packages with extrafeatures, extra storage, extra views and extra editing time, depending onrequirements. Technology Underlying all Forbidden's work is its technological strength. Forbidden's video compression technology has provided a unique codec designedfor web-based editing. Control of the codec has led to improvements all the waythrough from storyboard editing to web publishing. Forbidden's Java player gives almost universal reach to Windows and Mac PCs. Theweb player, which does not require installation, security updates or machineconfiguration, will play automatically on standard machines. Forbidden upgradesits Java player to meet the evolving needs of the market. These days, high end mobile phones have internet access. Mobile publishing is akey component of Forbidden's armoury. FORscene is robust, automatically tuning itself to work well on a wide range ofcomputer speeds and internet connection speeds. These technical solutions are not easily copied by third parties as theexpertise required is so specialised and has taken a long time to accumulate. Technology Award FORscene has been recognised in the recent Royal Television Society technologyaward, awarded by the unanimous decision of the judges. FORscene is the perfect product for this potentially vast and exciting market. Shareholder Offer This year's Shareholder Offer is £1,000 worth of free credits. The form is atthe back of the Annual Report and Accounts. Regulatory (IFRS) Forbidden Technologies plc expects to adopt IFRS in the financial statements forthe year ended 31 December 2007. The board has begun considering the differencesbetween UK accounting standards and IFRS, and have identified accounting fordevelopment costs as an area which could impact on the company's financialstatements going forward. 25 April 2006 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 Profit and loss account for the year ended 31 December 2005 Unaudited 2005 2004 Note £ £Turnover 59,705 76,788 Administrative expenses (874,637) (787,563)Operating loss (814,932) (710,775) Interest receivable and similar income 54,605 68,259Loss on ordinary activities before taxation (760,327) (642,516) Tax on loss on ordinary activities 34,948 28,389 Loss for the financial year (725,379) (614,127) Basic and diluted loss per ordinary 0.8p share 2 (0.96p) (0.81p) 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 as at 31 December 2005 Unaudited 2005 2005 2004 2004 £ £ £ £Fixed assets Tangible assets 9,729 15,812 Current assets Debtors 172,592 142,551Liquid resources 876,919 1,606,903 1,049,511 1,749,454 Creditors: amounts falling due within one year (92,142) (72,789) Net current assets 957,369 1,676,665 Net assets 967,098 1,692,477 Capital and reserves Called up share capital 605,300 605,300Share premium account 2,925,375 2,925,375Capital contribution reserve 125,000 125,000Profit and loss account (2,688,577) (1,963,198) Shareholders' funds - equity 967,098 1,692,477 Cash flow statement for the year ended 31 December 2005 Unaudited 2005 2004 £ £Reconciliation of operating loss to net cash outflowfrom operating activities Operating loss (814,932) (710,775)Depreciation charges 25,541 30,130(Increase)/decrease in debtors (4,618) 27,163Increase/(decrease) in creditors 19,353 (12,193) Net cash outflow from operating activities (774,656) (665,675) Cash flow statement Cash flow from operating activities (774,656) (665,675) Returns on investments and servicing of finance 64,130 68,882Taxation - 25,277Capital expenditure (19,458) (32,124) Cash outflow before management of liquid resources (729,984) (603,640) Management of liquid resources 710,294 589,945 Financing - 5,625 (Decrease) in cash in the year (19,690) (8,070) Reconciliation of net cash flow to movement in net funds (Decrease) in cash in the year (19,690) (8,070)Cash outflow from decrease in liquid resources (710,294) (589,945) Movement in net funds in the year (729,984) (598,015) Net funds at the start of the year 1,606,903 2,204,918 Net funds at the end of the year 876,919 1,606,903 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 2004. The financial information in this preliminary announcement does not constitutethe company's statutory accounts for the years ended 31 December 2004 or 2005.The financial information for the year ended 31 December 2004 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 2005 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 2005 was approved bythe directors on 24th April 2006. 2. Earnings per share Diluted earnings per share has not been presented, as including all potentialordinary shares in the calculation would be anti-dilutive. Basic earnings per share The weighted average number of shares in issue during the year is 75,662,500(2004: 75,539,726). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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