Full Year Results, December 2003
Preliminary Results for the year ended 31st December 2003
I am pleased to report on the annual results for Forbidden Technologies for the fourth completed year of our development. In the year to 31 December 2003 we made sales of £40,471 compared with £9,040 in the previous year and recorded a loss of £476,843 compared with £430,981 in the previous year. The increased loss is the result of higher investment in resources (mainly for business and sales development). Our balance sheet continues to be very strong with £2.3 million of net current assets.
2003 has proven to be a year of major technical developments building on the existing achievements that our highly skilled team has made since the Company was floated in February 2000. From a modest ambition of developing a proprietary video compression technology which could work via 56k modem and the achievement of a talking heads demonstration in our first year, we have created a wide range of new compression techniques.
We have also adjusted our development programme to provide products for specific video related applications over multiple devices. Today, we offer six different products aimed at different user needs. You will see from the Chief Executives review that we are focused on providing value added solutions with widespread market appeal rather than a one product solution.
The marketplace has also changed significantly over the past four years. Prior to the downturn in the technology market in 2001, there was an expectation of early widespread availability of true broadband and of 3G mobile. Post the bubble there has been a recognition that new markets and the adoption of new technologies will take more time to come into effect. In truth, we should marvel that such major innovations as video with sound on mobile phones or live compression of video on a variety of platforms are becoming available in such a short time.
We have transitioned from a service based organisation to one which is now product/solution centred. We have moved from our early stage in-house bureau focused activities to also distributing and licensing our products. We are now licensing compressors and software to customers, and already have orders for ten such systems out in the marketplace. We are extending our geographic reach, with compressors licensed in Japan, Italy, Spain and the UK.
Forbiddens business model ensures that we will be competitively placed to take advantage of these markets as they develop. On top of our superior products and technology, we are seemingly rare in our market segment in maintaining tight budgetary controls and have avoided building up huge losses in developing and bringing products to market. This strategy allows us to provide value added products at very competitive prices. Licensing to large potential customer groups is a further aid to scalability without significant increases in fixed costs.
The European Commission has recently ruled that Microsofts compulsory shipping of its own media player in its operating system was illegal and anticompetitive and has ordered Microsoft to make versions of its operating system which do not include its media player. This can only help companies such as ours which work independently of any installed media players.
Forbiddens video technology allows far reaching access to PCs because it does not require broadband and does not get blocked by firewalls. The increasing spread of Java is playing to Forbiddens strengths. Not only is our video widely accessible but, by writing our new tools in Java, we are making these accessible to people with web access too.
I would like to reiterate that we are passionate about our Company and our dynamic technology, and to reinforce our belief that video, over the next decade, will replace text and sound as the mainstay of communications. Forbidden Technologies reputation as a front runner in video delivery is growing, as witnessed by the increasing number of visits to our website www.forbidden.co.uk and the increasing number of unsolicited enquiries we are receiving from potential customers.
Chief Executive’s Review
In 2003, Forbidden transformed its commercial products and services. The Company is now set to market a range of six products:
- Internet editing and publishing tool: FORscene
- Video for mobile phones: FORmobile
- Live internet video streaming: FORlive
- Video presentations with slides: FORpresentation
- Video email: FORmail
- Video for websites: FORweb
During the year, the company progressed from offering bureau services to selling compression systems to enable customers to create their own videos. Forbiddens products and services enable the distribution of video over both fixed and mobile Internet to multiple devices.
Sales & Marketing
We have placed increasing importance on marketing during the year. The Company exhibited at its first international exhibition, IBC in Amsterdam (Europes largest broadcast trade show). Due to the popularity of the Companys stand, in 2004 Forbidden has been invited on to the organising committee of the IBC. An Internet advertising campaign has also increased the profile of the Company.
As well as selling systems, our products can be distributed over the web, and the website (www.forbidden.co.uk) has proved an extremely effective communications tool. Daily updates are needed to keep pace with the rapid progress. Hits have multiplied during the year; we are now contacted regularly by new leads, increasing the effectiveness of our sales team.
Although the primary focus is on the UK market, we have made sales in three other countries Japan, Italy and Spain. As Forbiddens products become increasingly simple to install and support, the Company is becoming more confident about sales further afield.
As a young and dynamic company, Forbidden employs only the highest calibre people. Over the year, we have expanded to provide additional resource for the Bureau services and customer support team. The Companys technical team remains the same size.
All full time permanent staff benefit from share options. During 2003, staff exercised options granted in 2000, allowing them to share the increase in Forbiddens value they helped to create. Proceeds from this option exercise have helped keep our reduction in net assets this year similar to last year, in spite of the Companys increased activity.
Forbidden Technologies plc will have the option to adopt IFRS in the financial statements for the year ended December 2005. The Board has begun considering the differences between UK accounting standards and IFRS. We have initially identified accounting for share options and development costs as two areas which could impact on our financial statements.
Forbidden Technologies includes its large shareholder base in the product development process. This year the company is offering registered shareholders Â£100 worth of free credits to use with the new FORscene product, which enters its alpha test phase this month. FORscene is an exciting and visionary video compression, editing and publishing product that allows customers to edit video footage on line. Remarkably, customers can then publish the resulting videos on the web or on mobile phones at the touch of a button. It is extremely simple and efficient to use and its Java implementation makes it universally accessible from a web page.
Stephen B Streater