Interim Results
Forbidden Technologies PLC
28 September 2006
28 September 2006
Forbidden Technologies plc
Interim Results for the six months to 30 June 2006
Forbidden Technologies plc ('the company' or 'Forbidden', AIM: FBT), through its
proprietary technologies, has developed and is marketing a range of Internet
video editing and sharing platforms for a wide range of market segments in the
wired and wireless world.
In the six months to 30 June 2006 the company recorded sales of £68,228 compared
to £17,851 in the first half of the previous year. Administrative expenses were
£384,760 (2005: £401,493) and the loss in the six months was £360,274 (2005:
£390,929).
At 30 June 2006, the balance sheet showed £655,474 of net current assets (2005:
£1,328,915) and cash and liquid resources of £645,676 (2005: £1,280,451).
Sales are significantly higher than in the first six months of 2005 and in fact,
have exceeded the total sales achieved in the whole of the previous year (2005:
£59,705).
With higher sales and lower administration costs, the loss is also reduced and
the cash outflow from operating activities is consequently lower at £305,543 (H1
2005: £337,837).
For the first time in this interim reporting period, we are obliged to implement
FRS 20, the new accounting standard which requires us to reflect the 'cost' of
share options in the profit & loss account of the company. We have included a
line 'FRS 20 employee share option cost' shown within 'Operating loss'. This
results in an increase in the reported loss for the six months to the end of
June 2005 by £46,007 and for the six months to the end of June 2006 by £55,638.
This is a non-cash item, does not affect cash flow and is neutral to the balance
sheet.
Progress and prospects
The Forbidden Team have just returned from the International Broadcasting
Convention (IBC) in Amsterdam. It is gratifying to note that, whereas a year ago
visitors to IBC were impressed by our technology, this year there was a marked
difference. Visitors looked at FORscene as a complete working product and were
primarily interested in how it could be used in their individual businesses. We
secured a large number of promising leads from the UK and from many other
countries and these will be followed up in the coming weeks and months.
At IBC the FORscene web-based post production platform was the base for IBC's
first citizen journalism project which allowed attendees to contribute their own
video stories through their mobile phones. The news clips sent to the IBC
Citizen TV base were edited daily using FORscene, which automatically formatted
and compressed the video into mobile-size clips for viewers.
Regular visitors to our website (http://www.forbidden.co.uk) will have seen the
regular news items on customers and new markets. To summarise some of these I
would highlight: repeat business being done with Granada; ongoing and regular
use of FORscene by BBC News 24; the first two successful FORscene projects by
Ryerson University in Toronto (thus training future producers and editors to use
FORscene); the imaginative use of FORscene by Save the Children in webcasts and
tapeless distribution for project coverage on BBC Breakfast, This Morning,
Channel 4 News, Channel 5 News and Sky News. Our mobile and podcasting services
have recently been used by the Armed Forces and advertisers.
These examples indicate the wide variety of applications of FORscene, improving
speed and cost efficiency in different circumstances.
As the speed of the internet continues to grow rapidly, the marketplace for
Forbidden as a key supplier of video across the world grows with it. Our
opportunity to capitalise on our technological lead expands as a consequence.
In my report to shareholders for the full year results of 2005, I indicated that
we expected significant sales increases in 2006, and that, if our expectations
of the outcome of the various pilots and projects with broadcasters are
realised, shareholders should begin to see significant change in the profile of
the business.
The increase in sales is clearly beginning. However, the degree of caution with
which some of our potentially large customers approach changes in technology and
workflow changes has resulted in a longer gestation period than expected in some
cases. Our confidence in the outcome is not diminished and we believe that the
difference in timing is a matter of months rather than years.
As FORscene becomes used more widely, and with the commercial opportunities
emerging, the Board is now reviewing a number of options including a
fundraising. If a fundraising is chosen, my preference is to include our
existing shareholders - the directors personally have £1 million available.
Vic Steel
Chairman
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 six months ended 30 June 2006
Unaudited (Restated) (Restated)
half year to
30 June Unaudited Unaudited
2006 half year to year to
£ 30 June 31 December
2005 2005
£ £
Turnover 68,228 17,851 59,705
Administrative expenses before FRS 20 employee (384,760) (401,493) (874,637)
share option cost
FRS 20 employee share option cost (55,638) (46,007) (101,199)
Administrative expenses (440,398) (447,500) (975,836)
Operating loss (372,170) (429,649) (916,131)
Interest receivable 11,896 38,720 54,605
Loss on ordinary activities before taxation (360,274) (390,929) (861,526)
Tax on loss on ordinary activities - - 34,948
Loss for the period (360,274) (390,929) (826,578)
Basic and diluted loss per ordinary (0.48p) (0.52p) (1.09p)
0.8 pence share
Reconciliation of movements in shareholders' funds
for the six months ended 30 June 2006
Unaudited (Restated) (Restated)
half year to
30 June Unaudited Unaudited
2006 half year to year to
£ 30 June 31 December
2005 2005
£ £
Loss for the period (360,274) (390,929) (826,578)
FRS 20 employee share option cost 55,638 46,007 101,199
Net reduction in shareholders' funds (304,636) (344,922) (725,379)
Opening shareholders' funds 967,098 1,692,477 1,692,477
Closing shareholders' funds 662,462 1,347,555 967,098
A statement of recognised gains and losses has not been included as part of this
Interim Report as the Company made no gains or losses in the year other than as
disclosed in the Profit and Loss Account.
The results stated above are all derived from continuing operations
Balance sheet
as at 30 June 2006
Unaudited Unaudited Unaudited
as at as at as at
30 June 30 June 31 December
2006 2005 2005
£ £ £
Fixed assets
Tangible assets 6,988 18,640 9,729
Current assets
Debtors 117,751 167,481 172,592
Cash and liquid resources 645,676 1,280,451 876,919
763,426 1,447,932 1,049,511
Creditors: amounts falling due within one year (107,953) (119,017) (92,142)
Net current assets 655,474 1,328,915 957,369
Net assets 662,462 1,347,555 967,098
Capital and reserves
Called up share capital 605,300 605,300 605,300
Share premium account 2,925,375 2,925,375 2,925,375
Capital contribution reserve 125,000 125,000 125,000
Profit and loss account (2,993,213) (2,308,120) (2,688,577)
Equity shareholders' funds 662,462 1,347,555 967,098
This Interim Report was approved by the Board of Directors on 27 September 2006
and was signed on their behalf by:
Stephen Streater
Director
Cash flow statement
as at 30 June 2006
Unaudited (Restated) (Restated)
half year to
30 June Unaudited Unaudited
2006 half year to year to
£ 30 June 31 December
2005 2005
£ £
Reconciliation of operating loss to net
cash outflow from operating activities
Operating loss (372,170) (429,649) (916,131)
FRS 20 employee share option cost 55,638 46,007 101,199
Depreciation charges 6,988 11,484 25,541
Decrease/(increase) in debtors (11,810) 768 (4,618)
Increase/(decrease) in creditors 15,811 33,553 19,353
Net cash outflow from operating activities (305,543) (337,837) (774,656)
Cash flow statement
Cash outflow from operating activities (305,543) (337,837) (774,656)
Returns on investment and servicing of finance 17,122 23,787 64,130
Taxation 61,425 - -
Capital expenditure (4,247) (14,312) (19,458)
Cash outflow before management of liquid resources (231,243) (328,362) (729,984)
Management of liquid resources 231,243 338,128 729,984
Financing - - -
Increase/(decrease) in cash in the period - 9,766 -
Reconciliation of net cash flow
to movement in net funds
Increase/(decrease) in cash in the period - 9,766 -
Cash outflow from liquid resources (231,243) (338,128) (729,984)
Movement in net funds in the period (231,243) (328,362) (729,984)
Net funds at the start of the period 876,919 1,606,903 1,606,903
Net funds at the end of the period 645,676 1,278,541 876,919
Notes
forming part of the financial statements
1. Basis of preparation
The Interim Report for the six months ended 30 June 2006 and 2005 is unaudited
and does not constitute statutory accounts within the meaning of Section 240 of
The Companies Act 1985. It has been prepared under the historical cost
convention and on a basis consistent with the accounting policies for the year
ended 31 December 2005 except as noted below.
The results for the year ended 31 December 2005 and the balance sheet of that
date are an extract from the statutory financial statements for that year, which
have been filed with the Registrar of Companies and on which the Company's
auditors gave an unqualified report and did not contain a statement under
Section 237 (2) or (3) of that Act. As explained below, these results have
however been adjusted following the adoption of FRS 20 and these adjustments
have not been audited. Accordingly the comparative information for the year
ended 31 December 2005 is unaudited.
The interim financial statement has been prepared on a basis consistent with the
accounting policies disclosed in the Annual Report and Accounts for the year
ended 31 December 2005 and also the new accounting policy applicable in this
period as described below.
Share based payments
The share option programme allows employees to acquire shares of the Company.
The fair value of options granted after 7 November 2002 and those not yet vested
as at the company's effective date of FRS 20 (which is 1 January 2006) is
recognised as an employee expense with a corresponding increase in equity. The
fair value is measured at grant date and spread over the period during which the
employees become unconditionally entitled to the options. The fair value of the
options granted is measured using an option pricing model, taking into account
the terms and conditions upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number of share
options that vest
The prior year figures in the profit and loss accounts for the 6 month period to
30 June 2005 and for the year to 31 December 2005 have been restated for the
impact of FRS 20. In the 6 month period to 30 June 2005 a charge in relation to
share based payments of £46,007 has been made; in the year to 31 December 2005 a
charge in relation to share based payments of £101,199 has been made.
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