Interim Results

Forbidden Technologies plc (AIM: FBT), the AIM quoted market-leading cloud video platform owner, announces its interim results for the six months ended 30 June 2016.

Financial highlights

— Increase in invoiced sales by 25% to GBP445k
— — (6 months to 30 June 2015: GBP355k)
— Revenues GBP327k
— — (6 months to 30 June 2015: GBP327k)
— Deferred revenue GBP150k
— — (31 December 2015: GBP39k)
— Operating costs of GBP1,323k
— — (6 months to 30 June 2015: GBP1,399k)
— EBITDA loss of GBP1,041k
— — (6 months to 30 June 2015: GBP1,119k)
— Operating cash outflow of GBP965k
— — (6 months to 30 June 2015: GBP1,324k)
— GBP1,201k received from the issue of new shares, net of costs
— Liquid funds of GBP1,803k at 30 June 2016
— — (31 December 2015: GBP1,676k)

Operational highlights

— Growth in the sales force starting to generate sales momentum with 25% growth in invoiced sales versus the corresponding period last year, and growth in deferred revenues of GBP150k from GBP39k at 31 December 2015.

— Continued growth and commercial traction in sports video solutions and overall in the US market.

— Implemented a leaner cost structure in May with benefits starting to accrue in the second half of the year.

— Stephen Streater stepped down as Chairman to be more intensively involved in technology development, and David Main moving from Non-Executive Director role to Chairman.

— Successful fundraising of net GBP1.2m which is being used to strengthen the Company’s sales team.

Aziz Musa, Forbidden Technologies CEO, commented:

“I am pleased with our progress in the first half having secured 25% growth in invoiced sales over the corresponding period last year. This builds on the early momentum in 2HY2015.

In addition to this we successfully secured new funding, welcoming new investors to support the Company’s development, and completed an organisational restructuring saving circa GBP1.0m in operating and capitalised costs on an annualised basis.

Finally, an increase in direct sales capacity has given us a stronger top-line focus, and I look forward to seeing our growth continue in the second half.”

Enquiries

Forbidden Technologies plc
Aziz Musa, CEO
Tel: +44 (0)20 8879 7245
Allenby Capital Limited (Nominated Adviser and Broker)
Nick Naylor, John Depasquale, Richard Short, Katrina Perez
Tel: +44 (0)20 7397 8900

Redleaf Communications (Financial PR)
Rebecca Sanders-Hewett, David Ison, Susie Hudson
Tel: +44 (0)20 7382 4730
Email: forbidden@redleafpr.com

About Forbidden Technologies plc

Forbidden Technologies plc (AIM: FBT, www.forbidden.co.uk) floated in February 2000.

The Company develops and markets a powerful cloud video platform with multiple applications which can be used by rights holders, broadcasters, sports and news video specialists, post-production houses, other mass market digital video channels, corporates and consumers. The platform applications help customers improve their time to market on time sensitive content, and efficiently exploit the full value of their content.

Websites
www.forbidden.co.uk
www.forscene.com
www.eva.co
www.captevate.com

Social media
www.facebook.com/FORscene
www.plus.google.com/+Forscenepro/posts
www.linkedin.com/company/forscene
www.twitter.com/forscenepro
www.youtube.com/user/ForsceneTraining

Chairman’s Statement

The six-month period to 30 June 2016 was one of building on the momentum of the second half of last year, driven by an increased focus on commercialising our cloud video platform. This growing momentum is reflected in our results, as we look to re-establish a pattern of growth in our business.

The market for video solutions increasingly demands a range of tools to be able to fully exploit the value of high quality content. The range of tools/apps includes those for user generated content, video upload, logging and editing, non-professional video editing, rapid generation of web clips and highlights packages, and multi-channel publishing. We believe we now have the broadest range of integrated cloud video solutions available, ranging from our post production solutions for reality TV and other related long form broadcast shows, to professional sports and news solutions, a social/user generated video solution – eva, and what we believe is the simplest video editing and publishing solution on the market – Captevate.

Our commercial successes in the first half of the year include strengthening our position in Sports, progressing our sales in the North American market, securing a sale with the South African government, achieving our first commercial uses of eva and Captevate, and securing an agreement with Microsoft to be part of its Azure marketplace.

Our technology and product development team is intensively focused on supporting our commercial opportunities going forward while ensuring we maintain our leading position in providing cloud video solutions.

During this period, we also successfully raised an additional net GBP1.2 million in June 2016 and strategically reduced our cost base, primarily in non-commercial areas of the business. This provides us with a stronger financial base while we grow our sales.

Post this interim period, we have continued to make commercial progress, including most recently securing a contract with an iconic sports venue in the US to help it accelerate the release of media highlights from its on-site events. Helping to provide speed to market of content as well as tools to expand the use of professional content will be an important focus for us going forward.

Financial

Our key growth metric of invoiced sales was up 25% to GBP445k for the six-month period ending 30 June 2016 versus GBP355k in the corresponding period last year. Invoiced sales relate to licences and services sold for a series of productions or events over a period of usually up to 12 months.

Revenue earned in the period from invoiced sales was GBP327k, flat with the corresponding period last year. Deferred revenue on the balance sheet to be earned in future accounting periods was GBP150k, up from GBP39k as at 31 December 2015.

After cost of sales the gross profit generated in the period of GBP283k continued to produce a high gross margin of 86.5% similar to the corresponding period last year. Operating costs were GBP1,323k (30 June 2015: GBP1,399k), net of capitalised development costs of GBP177k (2015: GBP227k). The EBITDA loss for the period was GBP1,041k (30 June 2015: GBP1,119k) and the loss for the period was GBP1,313k (30 June 2015: GBP1,351k).

Operating cash outflow in the period was GBP965k (30 June 2015: GBP1,324k).

On 6 June 2016 the Company completed a GBP1.3m placing (before expenses) through the issue of 18,571,421 new ordinary shares of 0.8 pence each at a price of 7 pence per share. The placing provided cash of GBP1,193k after expenses. The proceeds of the placing are being used to support the growth programs of the business. The balance of the total of GBP1,201k raised through share issues came from an option exercise. The Company remains debt free and had liquid funds of GBP1,803k at 30 June 2016 (31 December 2015: GBP1,676k, 30 June 2015: GBP2,863k).

On 31 May 2016 the Company completed a restructuring aimed at reducing ongoing operating and capitalised costs by around GBP1.0 million on an annualised basis, whilst maintaining a strong sales-focused organisation in which we have a direct sales resource of seven full-time employees versus 1.8 at 30 June 2015. These savings will start to accrue in the second half of 2016.

Prospects

As well as starting this period with a larger base of deferred revenues than both six and twelve months ago, we have a larger sales force than we have ever had before. In addition, we continue to build our base of partners to help drive sales going forward.

Our recent deal with an iconic sports, music and entertainment venue in New York reflects an increased focus on helping customers to more effectively exploit the value of high quality content they are already generating. It also demonstrates our growing presence in the US market.

We continue to strengthen our cloud video platform against key customer needs and ensure that all our solutions are capable of working together. Expanding the use of our platform within our existing customer base is a key part of our customer growth and retention strategy and we are excited about the prospects provided by further commercial traction and deals.

UNAUDITED AND CONDENSED CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME FOR
THE SIX MONTHSED 30 JUNE 2016

Unaudited
Half Unaudited Audited
year Half Year
to year to 31
30 June to December
2016 30 June 2015
2015
GBP GBP GBP
CONTINUING OPERATIONS

Revenue 326,898 327,338 708,717
Cost of Sales (44,145) (47,167) (108,408)
=============================== ============ ============ ============

GROSS PROFIT 282,753 280,171 600,309

Operating costs (1,323,258) (1,398,781) (2,686,059)
=============================== ============ ============ ============

EARNINGS BEFORE INTEREST,
TAXATION, DEPRECIATION
AND AMORTISATION (1,040,505) (1,118,610) (2,085,750)

Depreciation (24,978) (68,114) (156,162)
Loss on disposal of
fixed assets – – (1,309)
Amortisation (208,700) (152,850) (334,602)
Employee share option
costs (41,003) (35,769) (84,783)
(274,681) (256,733) (576,856)

OPERATING LOSS (1,315,186) (1,375,343) (2,662,606)

Finance income 1,705 24,374 27,124
=============================== ============ ============ ============

LOSS BEFORE INCOME TAX (1,313,481) (1,350,969) (2,635,482)

Income Tax – – 79,059
=============================== ============ ============ ============

LOSS FOR THE PERIOD (1,313,481) (1,350,969) (2,556,423)

TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD (1,313,481) (1,350,969) (2,556,423)
=============================== ============ ============ ============
Earnings per share expressed
in pence per share:
Basic – continuing and
total operations (0.97p) (1.02p) (1.94p)
=============================== ============ ============ ============

UNAUDITED AND CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 JUNE 2016

Unaudited Unaudited Audited
at 30 June at 30 June at 31 December
2016 2015 2015
GBP GBP GBP
ASSETS
NON-CURRENT ASSETS

Intangible assets 1,486,690 1,438,553 1,518,666

Property, plant and
equipment 62,225 125,429 74,956
=============================== ============= ============= ================

1,548,915 1,563,982 1,593,622
============================== ============= ============= ================

CURRENT ASSETS

Inventories 6,788 60,318 –

Trade and other receivables 303,466 323,498 233,845

Tax receivable – – 79,059

Cash and cash equivalents 1,802,770 2,862,604 1,675,695
——————————- ————- ————- —————-

2,113,024 3,246,420 1,988,599
============================== ============= ============= ================

TOTAL ASSETS 3,661,939 4,810,402 3,582,221
=============================== ============= ============= ================

EQUITY
SHAREHOLDERS’ EQUITY

Called up share capital 1,203,890 1,054,518 1,054,518

Share premium 14,368,893 13,317,572 13,317,572

Capital contribution
reserve 125,000 125,000 125,000

Retained earnings (12,460,180) (10,031,262) (11,187,702)

TOTAL EQUITY 3,237,603 4,465,828 3,309,388
=============================== ============= ============= ================

CURRENT LIABILITIES

Trade and other payables 424,336 344,574 272,833
=============================== ============= ============= ================

TOTAL LIABILITIES 424,336 344,574 272,833
=============================== ============= ============= ================

TOTAL EQUITY AND LIABILITIES 3,661,939 4,810,402 3,582,221
=============================== ============= ============= ================

UNAUDITED AND CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHSED 30 JUNE 2016

Called Capital
up share Share contribution Retained Total
capital premium reserve earnings equity
GBP GBP GBP GBP GBP

Balance at
1 January
2015 1,054,518 13,317,572 125,000 (8,716,062) 5,781,028

Changes in
equity

Share based
payment – – – 35,769 35,769

Total comprehensive
income – – – (1,350,969) (1,350,969)
———————- ———- ———– ————– ————- ————

Balance at
30
June 2015 1,054,518 13,317,572 125,000 (10,031,262) 4,465,828
———————- ———- ———– ————– ————- ————

Changes in
equity

Share based
payment – – – 49,014 49,014

Total comprehensive
income – – – (1,205,454) (1,205,454)
====================== ========== =========== ============== ============= ============

Balance at
31 December
2015 1,054,518 13,317,572 125,000 (11,187,702) 3,309,388
====================== ========== =========== ============== ============= ============

Changes in
equity

Issue of
share capital 149,372 1,051,321 – – 1,200,693

Share based
payment – – – 41,003 41,003

Total comprehensive
income – – – (1,313,481) (1,313,481)
====================== ========== =========== ============== ============= ============

Balance at
30 June 2016 1,203,890 14,368,893 125,000 (12,460,180) 3,237,603
====================== ========== =========== ============== ============= ============

UNAUDITED AND CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHSED 30 JUNE 2016

Unaudited Unaudited Audited
Half Half Year
year year to 31
to to December
30 June 30 June 2015
2016 2015

GBP GBP GBP
EARNINGS BEFORE INTEREST,
TAXATION, DEPRECIATION
AND AMORTISATION (1,040,505) (1,118,610) (2,085,750)

(Increase)/decrease
in trade and other receivables (69,623) (29,620) 60,033
(Increase)/decrease
in inventories (6,788) (18,355) 41,963
Increase/(decrease)
in trade and other payables 151,505 (157,003) (228,744)
————————————– ————- ————- ————-

CASH GENERATED FROM
OPERATIONS (965,411) (1,323,588) (2,212,498)

Tax received 79,059 33,650 33,650
————————————– ————- ————- ————-

NET CASH FROM OPERATING
ACTIVITIES (886,352) (1,289,938) (2,178,848)

CASH FLOWS FROM INVESTING
ACTIVITIES

Purchase of intangible
fixed assets (176,724) (226,864) (488,729)
Purchase of tangible
fixed assets (12,247) (3,868) (44,639)
Sale of tangible fixed
assets – – 1,887
Sale of fixed term deposits – 2,000,000 2,000,000
Interest received 1,705 24,374 27,124
————————————– ————- ————- ————-

NET CASH FROM INVESTING
ACTIVITIES (187,266) 1,793,642 1,495,643

CASH FLOWS FROM FINANCING
ACTIVITIES

Share issue (net of
expenses) 1,200,693 – –

NET CASH FROM FINANCING
ACTIVITIES 1,200,693 – –

Increase in cash and
cash equivalents 127,075 503,704 (683,205)
————————————– ————- ————- ————-

CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 1,675,695 2,358,900 2,358,900

CASH AND CASH EQUIVALENTS
AT OF PERIOD 1,802,770 2,862,604 1,675,695
————————————– ————- ————- ————-

NOTES TO THE UNAUDITED AND CONDENSED CONSOLIDATED INTERIM ACCOUNTS

FOR THE SIX MONTHSED 30 JUNE 2016

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 2015. 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 — September 2016. The information for the year ended 31 December 2015 is extracted from the statutory financial statements for that year which have been reported on by the Group’s 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 31 December 2015.