Final results for the year to 31 December 2009
Forbidden Technologies, the AIM quoted developer and marketer of a leading web-based video platform, is pleased to announce its Final Results for the twelve months to 31st December 2009. The Board has now adopted the International Financial Reporting Standards (IFRS) as its reporting format.
- Increase in sales of 131% to £280,826 (2008: £121,199)
- Reduction in loss after tax of 25% to £56,679 (2008:£76,401)
- The Company issued 2,500,000 new shares at 10p a share, representing a 29% premium to the prevailing market price, together with 2,500,000 options with an exercise price of 12p per share, a 55% premium – raising over £300,000 in the year
- Partnerships with substantial companies, including with BIM and Chyron
- The Company is in serious discussions with several other international operators
- Over 1 million hours of video has been processed through FORscene
- The rapid growth in demand for professional web video is increasing the demand for high quality video from media web-sites. FORscene is well placed to take advantage of this growth
Vic Steel, Chairman of Forbidden Technologies, commented:
"The Board is encouraged that the sales in 2009 came largely from repeat business from existing customers, enhanced by the addition of increasing numbers of new customers in UK based post-production and facilities houses. The trend is continuing in 2010".
"Having developed a web-based video platform over several years before the market place was ready or able to use it to its advantage, we see increasing evidence of recognition that FORscene is a leading platform that has a very bright future".
"We continue to be fortunate in having high calibre, skilled and dedicated employees. Their loyalty is a testament to their belief in the high potential of the Company".
For further information please visit www.forbidden.co.uk or contact:
Forbidden Technologies plc
Tel: 020 8879 7245
Stephen Streater, Chief Executive
Brewin Dolphin Investment Banking
Tel: 0845 213 4726
Tel: 020 7562 3350
Gemma OHara/Siobhra Murphy
I am pleased to present this, the eleventh annual report to shareholders of Forbidden Technologies since its flotation on the AIM market of the London Stock Exchange in February 2000.
Income Statement and Statement of Financial Position
In preparing the income statement and statement of financial position for the year ended 31st December 2009, the Board has now decided to adopt the International Financial Reporting Standards (IFRS) as the more appropriate reporting format for the nature of our business. We believe this to be a timely change as we begin to move towards becoming a more global business, and that it makes it easier to compare our performance with similar businesses.
Whereas in the past Forbidden Technologies has written off to expenses the total cost of all research and development activities in the year in which they were incurred, under IFRS development costs are capitalised. This has the effect of reducing development costs in the income statement and showing a commensurate increase on the statement of financial position for intangible assets and thus also increasing the level of net assets of the Company. In accordance with the requirements of IFRS the figures for 2008 have been restated in IFRS convention.
In the year to 31st December 2009 the Company achieved sales of £280,826 compared to £121,199 in the previous year, an increase of 131%. Administrative expenses in the year to 31st December 2009 at £341,192 compared to £207,445 in the previous year. An increase of £133,747, largely as a result of personnel increases in marketing, sales and R&D.
The loss after tax for the year to 31st December 2009 was £56,679 compared to £76,401 in the prior year.
The statement of financial position shows total equity and liabilities of £781,001 at 31st December 2009 compared with £398,256 at 31st December 2008. During the 2009 year the Company issued 2,500,000 new shares at 10p a share, representing a 29% premium to the prevailing market price, together with 2,500,000 options with an exercise price of 12p per share, a 55% premium. Following partial option exercises, this resulted in an increase in cash resources of just over £350,000. The £1m loan facility provided by two of the directors (Stephen Streater and Vic Steel) was extended during the year until the end of 2011. At 31st December 2009, £785,000 of this facility had been drawn down.
The Board is encouraged that the sales in 2009 came largely from repeat business from existing customers, enhanced by the addition of increasing numbers of new customers in UK based post-production and facilities houses. The trend is continuing in 2010. The improving rate of sales progress is apparent when looking at a three year bar chart.
Market Place and Strategy
In the 2009 annual accounts we identified four significant market opportunities:
- Broadcast (including all post-production companies)
- Professional web video
- In-house video
- Serious hobbyists
Our belief that the credit crisis and financial pressures would encourage broadcasters and post-production companies to adopt new web-based workflows appears to be well-founded. Customers are increasingly aware that FORscene "saves time and money", and increasing numbers of programmes are beginning to use FORscene.
The predicted rapid growth in demand for professional web video is now apparent as audiences and advertising move from broadcast TV to web, creating an expanding need for high quality video from media websites. FORscene is well placed to take part in this growth.
Our strategy in 2009, continuing in 2010, has been to focus on the broadcast and professional web video markets, with in-house video and serious hobbyists remaining as longer-term opportunities. These are not sectors in which we have yet applied significant resources.
To ensure scalability of the business we have been pursuing a strategy of forming partnerships with substantial companies who already operate and have many clients in markets relevant to FORscene. BIM and Chyron are examples of this, and we are in serious discussion with several other international operators. Scalability of our cloud-based platform has also been moved forward and it is described in more detail in the CEOs Review. One indicator of scalability is the fact that we have already exceeded 1 million hours of video processed through FORscene.
During 2009 we increased our efforts to become more visible in the investor community. We appointed Bishopsgate as our financial P.R. company and have established a regular output of press releases. In addition, we have been the subject of analyst research reports by two different organisations. We have also increased our involvement in relevant trade shows and conventions.
It is difficult to convey the enthusiasm, confidence and optimism that is felt by all of us who are involved at Forbidden. The increases in unsolicited enquiries about FORscene coming from different countries across the world indicate that awareness of our technology and its benefits are becoming widespread. The scale of business under discussion or negotiation increases from month to month. As a result we continue to see a very bright future and we sense that the
opportunity to achieve scale is not too far away.
We continue to be fortunate in having high calibre, skilled and dedicated employees. Their loyalty is a testament to their belief in the high potential of the Company.
Having developed a web-based video platform over several years before the market place was ready or able to use it to its advantage, we see increasing evidence of recognition that FORscene is a leading platform that has a very bright future. Continuing development is a constant feature of our technical team, with the objective of being ahead of any competitors over the coming years and our sales and marketing team enjoy an increasing warm reception from potential customers.
CHIEF EXECUTIVES REVIEW
There is an increasingly confident feeling at Forbidden Technologies.
Forbidden has developed, owns and now sells a leading video platform, FORscene. Since its launch in 2004, the infrastructure to supply reliable high bandwidth access has matured considerably. This is supporting the growing market for Internet based video storage and post-production services.
The FORscene platform is now part of the modern trend of Cloud Computing. Mastering the exacting requirements for professional video post-production in the Cloud is hard. We believe we are well ahead of potential competitors in developing the right solutions for this complex sector. Our focus has been on developing a more effective and efficient Cloud based solution – a service that is accessible from anywhere. Services such as Googles Cloud-based text editing are raising the profile of Cloud-based services; Cloud-based video services are now anticipated and FORscene meets this need.
Key positive factors for FORscene are:
- the growth of Cloud Computing
- its acceptance in broadcast television
- the rapid growth of professional web video
- its scaleability
- Forbiddens access to partners
- higher profile
- FORscenes technological foundations
- Forbiddens access to capital
Broadcast globally is a $20Bn market. FORscene entered this market through review and logging functions. During 2009, FORscene moved up the value chain to include shot selection, rough cut editing – and even fine cut editing. As people move from traditional desktop systems into the Cloud, we expect FORscene use to continue to move up the value chain. Programmes for BBC, ITV, Channel 4 or Sky, Bloomberg and CNBC all benefit from the flexibility of FORscene workflows, and the savings in both time and money.
In 2009, the UK became the first major market where web advertising revenue overtook TV advertising revenue. Advertisers and subscription websites need professional video to attach their brands to. The Cloud-based approach can produce video at the right quality – even without broadcast budgets. Most of the million hours of professionally shot content handled by FORscene has been for Web distribution.
FORscene use is starting to deliver economies of scale. Its system architecture is designed for high volume. Professional content has grown from 100 hours a week to over 10,000 hours a week with only a handful of extra Forbidden servers, and no additional support staff. FORscenes higher profile is self-perpetuating, generating more customers and more coverage. Our new large scale partnerships are promising new routes to market on a much larger scale than we have achieved to date.
Partnerships are playing an important role in opening up new markets for FORscene. Broadcast Interactive Media (BIM) now license FORscene to over sixty US television stations. We have integrated with Chyrons visionary Axis graphics system and we are assisting them with multiple US opportunities. Our adoption within SUNY and our close cooperation with TrueTube have given us exposure in the education market. The more recent Brightcove partnership is opening up opportunities in the web arena. Other partners are covered by NDAs.
FORscene has seen a sharply higher profile in the industry press. Commercial and technology news articles have been supplemented with Forbidden sourced quotes in more general articles. Our website has largely replaced printed literature on Forbiddens active exhibition schedule. 2009 saw BETT (with TrueTube), NAB (with Chyron) and IBC (with IBC TV News, Chyron and with our own stand). This year so far we have exhibited at BVE 2010 (where I was also on the Cloud Computing panel) and NAB 2010 (with Chyron and our own stand supported by our fledgling US office). Third party discussion of FORscene in conference sessions has helped drive visitors to our stands. A sprinkling of specialist events around the world has also allowed us to show off our platform. Video endorsements from users and a FORscene page in the Sony XD-CAM brochure further illustrate industry acceptance.
Forbidden has been featured in Aimzine, Decision Magazine, and recently in Moneyweek and the Penny Sleuth. Our good relationship with the London Stock Exchange led to a stand at the AIM conference. An investor seminar, multiple internet TV appearances, the Growth Company Investor Show 2009 (where we used FORscene to make these videos: http://clesh.com/videos/list/gci2009) and analysts reports from PSQ and GE&CR led up to a very busy Master Investor Show 2010. Active use of RNS Reach has simplified following our progress.
Technical advances in the year
Forbidden has continued to build on FORscenes technological foundations. The aim has been to increase scale and functionality without increasing overall serving or support costs. More efficient server software, improvements in hardware and moving even more work to client machines has minimised the need for more servers. Improvements in reliability and user interface design (our navigation bar now has a European patent) have kept support calls to a minimum. New functionality has allowed us to maintain prices. FORscene has joined in industry trends, such as to tapeless production, widescreen and high definition (HD). FORscene now supports post-production of HD content entirely in FORscene. Multicam, with up to eight concurrent video streams, was launched at NAB 2010, showing the depth of Forbiddens Cloud technology.
Access to capital
Raising money at a premium in a credit crunch can be hard. So our placing at a 29% premium to the prevailing market price, with options at a 55% premium can be seen as a success. This has provided us with £250,000 from the placing and a further £109,800 from option exercises. Our institutional investor has provided both stability and liquidity in the market.
Clesh (http://clesh.com/) is our consumer-friendly version of FORscene. We provide shareholders with free accounts so they can see Forbiddens technology in action – and have some fun making videos. Any questions can be answered over Cleshs built in chat system. This platform is a white label option for major websites wanting to add consumer generated video as core content. A recent development of the platform is the integration of searchable metadata with the videos. This addresses one of the critical challenges for platforms such as YouTube: how to associate relevant advertising with video to enable efficient monetization of video content.
I would like to thank our staff for their significant contributions, commitment, reliability and flexibility. This has directly resulted in the high levels of innovation and service we provide our customers.
Stephen B Streater
Full details can be found on the Stock Exchange w