Interim results for the six months to 30 June 2010

Forbidden Technologies, the AIM quoted developer and marketer of a leading cloud based video platform, is pleased to announce its Interim Results for the six months to 30 June 2010.

Highlights

  • Sales up 21% to £167,858 (2009: £138,774)
  • Gross profit up 22% to £158,375 (2009: £129,764)
  • Gross profit margin was maintained at a healthy 94%
  • Operating costs up 37% to £214,730 (2009: £156,695)
  • Operating loss £53,853 (2009: £26,931)
  • No drawdown from £1m loan facility (2009: £150,000 drawn down)
  • Positive balance of cash and cash equivalents of £137,553 at 30 June 2010

Post Period Highlights

  • Vic Steel, Chairman, and Phil Madden, Financial Director, increased their stake in the Company showing confidence in its future
  • Signed systems integrator agreement with Siemens IT Solutions & Services in South Africa
  • Envy Post production chose to provide FORscene as its logging and rough cut editing platform
  • Successfully demonstrated FORscene on the Nokia N900 smartphone
  • The addition of HTML5 video publishing, to FORscene, allowing Video published in FORscene
  • to be viewed through any device with a compliant web browser

Vic Steel, Chairman, commented:

"We maintain a positive outlook for the second half of the year and for the year as a whole. Our discussions with major international partners are progressing well, and interest in our cloud based technology continues to grow across a wide number of geographic markets in a variety of market segments.

The Directors anticipate increased growth and the achievement of profitable scale in the not too distant future."

Enquiries

Forbidden Technologies plc
Tel: +44 (0)20 8879 7245
Stephen Streater, CEO

Brewin Dolphin
Tel: 0845 213 4726
Neil Baldwin, Nominated Advisor

Bishopsgate Communications
Tel: +44 (0) 20 7562 3350
Gemma OHara/Siobhra Murphy
forbidden@bishopsgatecommunications.com

Chairmans Statement

I am pleased to announce that in the six months to 30 June 2010 the Company recorded sales of £167,858, compared to £138,774 in the corresponding period to 30 June 2009, an increase of 21%.

Gross profit margin was maintained at a healthy 94%.

The increase in operating expenses was in line with our plan to raise our profile and thus generate an increase in numbers of customers and in geographic diversity – both being a product of our strategy to develop significant partnerships. The increase of 37% to £214,730 (2009: £156,695) was primarily due to higher investment in advertising and marketing, the retaining of financial PR consultants, plus the cost of establishing a modest presence in the United States. The extra investment in operating expenses has resulted in an increase in the operating loss to £53,853 (2009: £26,931).

As shown in the Statement of Cash Flows the Company had a positive balance of cash and cash equivalents of £137,553 at 30 June 2010. Since that date, the Company has issued shares in response to monies received of £150,000 and has issued an option over 500,000 shares for £5,000, the option being exercisable at 24p per share (a 55% premium to the prevailing market price at time of issue). The Company has not drawn down any funds from the £1m loan facility and, on 26 July 2010, repaid £78,500 of loan to the Chairman. On 27 July 2010 the Chairman bought 450,000 shares and the Finance Director bought 75,000 shares in the market.

Looking at progress over the last six months there are a number of points I feel are worthy of drawing to the attention of our shareholders:

Technology Development

We continue to improve users experiences of our technology through systems upgrades particularly to our cloud server, through added features which customers indicated would be useful and through new applications such as our recently demonstrated Smartphone prototype. All of these refinements, we believe, will continue to keep us ahead of the market and reinforce our technical reputation.

UK Post Production

This has continued to grow by a combination of repeat business and new customers. With partnerships announced with such organisations as Editshare and Envy, we expect our penetration of the UK post production market to increase over the coming years.

Marketing Presence

The Company has succeeded in increasing its profile and visibility both through attendance at key industry shows and through wider press coverage in the trade and financial columns. We had good visibility at the National Association of Broadcasters Show (NAB) in Las Vegas, including our own stand for the first time, and had an impressive presence at IBC in Amsterdam this month with 5 points of representation including demonstrations of FORscene by Ericsson. We were present at this years Master Investor Show and will be at the Growth Company Investor Show on 29 September 2010.

Partnerships

Over the past year we have outlined our strategy of developing partnerships with significant companies who possess distribution strengths in our chosen market segments. This should result in acceleration of our growth and also enable us to continue to focus on our core competitive competence, that of being an outstanding and innovative technology company. Several partnership opportunities are under discussion and are making good progress. The recent announcement of an agreement with Siemens in Africa is the first systems integrator deal to be published. The partnerships with Envy and Editshare in the UK are noteworthy for strengthening our post production business both domestically and overseas.

Outlook

The large scale market presence provided by systems integrators rapidly adds delivery capacity by making FORscene available through a third party with global reach. Although exact timings of new sales through these partnerships are difficult to predict, the acceptance of Cloud video and Forbiddens place in this exciting market give us great confidence for the future.

The Directors anticipate increased growth and the achievement of profitable scale in the "not too distant" future.

FORBIDDEN TECHNOLOGIES PLC (REGISTERED NUMBER: 03507286)

STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2010

Unaudited half year to 30 June 2010 £ Unaudited half year to 30 June 2009 (restated) £ Year to 31 December 2009 £
CONTINUING OPERATIONS
Revenue 167,858 138,774 280,826
Cost of sales (9,483) (9,010) (30,170)
GROSS PROFIT 158,375 129,764 250,656
Other operating income 2,502
Operating expenses (214,730) (156,695) (341,192)
OPERATING LOSS (53,853) (26,931) (90,536)
Finance costs (3,925) 1,171 (2,519)
Finance income 20 60 115
LOSS BEFORE INCOME TAX (57,758) (25,697) (92,940)
Income tax 36,261
LOSS FOR THE PERIOD (57,758) (25,697) (56,679)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (57,758) (25,697) (56,679)
Earnings per share expressed in pence per share:
Basic td> (0.07p) (0.03p) (0.07p)
Diluted (0.07p) (0.03p) (0.07p)

STATEMENT OF FINANCIAL POSITION 30 JUNE 2010

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Unaudited half year to 30 June 2010 £ Unaudited half year to 30 June 2009 (restated) £ Year to 31 December 2009 £
NON-CURRENT ASSETS
Intangible assets 483,114 279,865 381,748
Property, plant and equipment 14,427 16,800 17,882
497,541 296,665 399,630
CURRENT ASSETS
Trade and other receivables 173,166 143,617 133,885
Tax receivable 36,261 36,261
Cash and cash equivalents 137,553 71,369 211,225
346,980 214,986 381,371
TOTAL ASSETS 844,521 511,651 781,001
SHAREHOLDERS' EQUITY
Called up share capital 639,260 609,300 632,820
Share premium 3,365,815 2,996,375 3,275,655
Capital redemption reserve 125,000 125,000 125,000
Retained earnings (4,163,677) (4,080,066) (4,112,205)
TOTAL EQUITY (33,602) (349,391) (78,730)
NON-CURRENT LIABILITIES
Trade and other payables 785,000 785,000 785,000
CURRENT LIABILITIES
Trade and other payables 93,123 76,042 74,731
TOTAL LIABILITIES 878,123 861,042 859,731
TOTAL EQUITY AND LIABILITIES 844,521 511,651 781,001

STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2010

Called up share capital £ Profit and loss account £ Share premium £ Capital redemption reserve £ Total equity £
Balance at 1 January 2009 609,300 (4,066,816) 2,996,375 125,000 (336,141)
Changes in equity
Issue of share capital 23,520 279,280 302,800
Share based payment 11,290 11,290
Total comprehensive income (56,679) (56,679)
Balance at 31 December 2009 632,820 (4,112,205) 3,275,655 125,000 (78,730)
Changes in equity
Issue of share capital 6,440 90,160 96,600
Share based payment 6,286 6,286
Total comprehensive income (80,584) (80,584)
Balance at 30 June 2010 639,260 (4,186,503) 3,365,815 125,000 (56,428)

STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2010

Unaudited half year to 30 June 2010 £ Unaudited half year to 30 June 2009 (restated) £ Year to 31 December 2009 £
Cash flows from operating activities
Cash generated from operations (78,389) (18,160) (87,651)
Finance costs paid (4,296) (7,810)
Tax paid 36,261 34,320
Net cash from operating activities (46,424) (18,160) (61,141)
Cash flows from investing activities
Purchase of intangible fixed assets (121,344) (110,780) (221,563)
Purchase of tangible fixed assets (2,524) (1,178) (10,410)
Interest received 20 63 115
Net cash from investing activities (123,848) (111,896) (231,858)
Cash flows from financing activities
Amount introduced by directors 150,000 150,000
Share issue 96,600 302,800
Net cash from financing activities 96,600 150,000 452,800
Increase/(Decrease) in cash and cash equivalents (73,672) 19,945 159,801
Cash and cash equivalents at beginning of period 211,225 51,424 51,424
Cash and cash equivalents at end of period 137,553 71,369 211,225

NOTES TO THE STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2010

1. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

Unaudited half year to 30 June 2010 £ Unaudited half year to 30 June 2009 (restated) £ Year to 31 December 2009 £
Loss before income tax (57,758) (25,697) (92,940)
Depreciation charges 14,127 4,124 12,274
Amortisation charges 19,977 8,899 17,798
Employee share option costs 6,286 12,447 11,290
Finance costs 3,925 (1,171) 2,519
Finance income (20) (63) (115)
(13,463) (1,461) (49,175)
Increase in trade and other receivables (75,542) 5,486 (19,102)
(Decrease)/Increase in trade and other payables 10,616 (22,185) (19,374)
Cash generated from operations (78,389) (18,160) (87,651)

2. CASH AND CASH EQUIVALENTS

The amounts disclosed on the cash flow in respect of cash and cash equivalents are in respect of these balance sheet amounts:

Unaudited half year to 30 June 2010 £ Unaudited half year to 30 June 2009 (restated) £ Year to 31 December 2009 £
Cash and cash equivalents 137,553 71,369 211,225

1.Basis of preparation and accounting policies

These interim statements have been prepared on a basis consistent with International Financial Reporting Standards (IFRS). They do not contain all of the information required for full financial statements and should be read in conjunction with the consolidated financial statements of the Company as at and for the year ended 31 December 2009.  These interim financial statements do not constitute statutory accounts within the meaning of the Companies Act.

The interim financial information has not been audited. The
interim financial information was approved by the Board of Directors on 24 September 2010.  The information for the year ended 31 December 2009 is extracted from the statutory financial statements for that year which have been reported on by the Groups auditors and delivered to the Registrar of Companies. The audit report was unqualified and did not contain a statement under s498(2) or 498(3) of the Companies Act 2006.

The accounting policies applied by the Company in these interim financial statements are the same as those applied by the Company in its financial statements for the year ended and as at 31 December 2009.

2.Restatement of prior period figures

The Interim accounts for the 6 months to 30 June 2009 have been restated to include an intangible asset in relation to development costs not previously capitalised under UK Generally Accepted Accounting Practice (GAAP).  Under IFRS these have been recognised where certain criteria have been met and subsequently amortised on a straight line basis over a period of 10 years.  The statement of financial position has been restated to reflect the intangible asset recognised in the period and the statement of comprehensive income restated to reflect the amortisation charge thereon.