RNS Number:2916T
Image Scan Holdings PLC
16 December 2003

For Immediate Release                                           16 December 2003

                            IMAGE SCAN HOLDINGS PLC
                        ("Image Scan" or the "Company")


Image Scan, a leading provider of 3D and multi-view, X-ray imaging technologies
for the security and industrial inspection markets announces preliminary results
for the year ended 30 September 2003.

Key Points

*   Turnover increased to #510,000 (2002: #503,000), over 70% in the security 

*   Group loss before tax of #839,000 (2002: #665,000);

*   Basic and diluted loss per ordinary share at 4.9p (2002: 4.0p);

*   Research and development expenditure up 27% to #150,000;

*   AXIS-3D(R) systems now in active service, with formal product launch in the 
    USA and Europe set for January 2004.

Commenting on the outlook, Nick Fox, Chief Executive of Image Scan Holdings plc

"This year has seen the completion of an intensive product development programme 
culminating in the first "active use" sales of our security products. Going 
forward our systems hardware improvements will enable us to quickly meet 
customer requirements providing innovative and cost effective solutions. The
Company's prime focus over the next 12 months will be to turn its current
product range into sales. Although our initial focus is on sales of the AXIS-3D
(R) systems in the security sector, early interest in industrial inspection
indicates that significant opportunities exist in a market where we believe
there is no comparable competition."

For further information:

Nick Fox, Chief Executive           Image Scan Holdings plc           (Today only) 020 7466 5000
                                                                      (Thereafter) 01664 503 600

Richard Darby/Suzanne Brocks        Buchanan Communications            020 7466 5000

Chairman and Chief Executive Review

This year has seen the completion of an intensive development programme
culminating in the first "active use" sales of our security products.  Going
forward our systems hardware improvements will enable us to quickly meet
customer requirements providing innovative and cost effective solutions.  The
Company's prime focus over the next twelve months will be to turn its current
product range into sales.  Although our initial focus is on sales of the AXIS-3D
(R) systems in the security sector, early interest in industrial inspection
indicates that significant opportunities exist in a market where we believe
there is no comparable competition.  It is against this backdrop that we are
pleased to present the results of Image Scan for the financial year ended 30th
September 2003.

Operations Review

The Company's business is underpinned by a common set of technologies which
enables it to operate in two primary sectors; security and industrial
inspection, using a core product set, configured for specific applications.  We
have made significant progress, both in terms of technology development and
market place acceptance.  Work within the medical sector, particularly relating
to the development of a unique cervical smear screening system continues to
progress well.  Although we are still approximately two years away from
commercial productivity in the medical sector, the initial reaction from experts
within the field has been encouraging.

The Company has used the previous twelve months to refine its core technology
for use in a series of clearly defined products consisting of X-ray cameras,
image acquisition and processing software.  The most significant of these
activities has been the modularisation of our hardware components to a common
interface for all cameras and detectors based on in-house custom designed
electronics.  This has produced an effective 'tool-box' of hardware options that
can be configured rapidly, with minimal technical risk, to meet new applications
as they arise.

Security Sector

Our principal hardware products within the security sector are the 2DX-CameraTM
and 3DX-CameraTM systems which respectively form the image acquisition
components for advanced 2D and 3D X-ray security screening units.  Within this
sector our products address the regulated aviation and the substantially larger
unregulated corporate and secure building markets.  Acceptance in the aviation
sector will provide a strong basis for approval within the corporate and secure
building arena.  It is the Company's intention to supply these products, and
their associated software systems, to existing players in the security sector
either on a license or an OEM basis.  As reported previously, our first push
into this market will be through our alliance partner, Rapiscan, in accordance
with our manufacturing and marketing agreement in respect of 3D cameras for
conventional baggage screening.  Progress to date has been significant:

* Expected engineering sign-off and CE approval for the Rapiscan version of the
  AXIS-3D(R) system followed by the planned international launch in January 

* Significant pre-launch marketing of the product has been undertaken by both
  companies with successful demonstrations to selected customers and exhibitions
  in the UK, USA, Australasia, CIS, France, Greece and the Middle East with
  additional demonstrations in Dubai, South Africa and India planned for the 
  next couple of months.

* Sales of equipment for active service have been achieved to the British and
  Romanian governments.

Having now established a route to market for our 3D X-ray camera, the Company is
also actively marketing its capabilities in the supply of our advanced
2DX-CameraTM; the 2D version of the 3DX-CameraTM.  We believe that this market
will result in some exciting additional sales opportunities for the current and
future years.  Initiatives already taken include:

* Recent proposals for the supply of 2DX-CamerasTM (including imaging software)
  to two additional prospective customers.

* Completion of a commercially funded development programme to produce an 
  'application specific' 2D camera for incorporation into a customer's existing
  product range.  Following the successful prototype development the engineering
  is scheduled to commence in late 2004 with product release anticipated some 
  six to nine months later.


This year has seen the launch of the Company's new DEXTM industrial inspection
system at the international exhibition Vision 2003 held in Stuttgart during
October.  The reaction from this event and subsequent marketing initiatives lead
us to believe that the Company's X-ray products are currently unique in the
market place.  It is believed that the DEXTM unit, designed for high speed, high
resolution in-line X-ray inspection will form the basis for the Company's
industrial inspection products.

In order to be very focussed on relevant markets where real benefits are easily
demonstrable and potentially significant to the customer, our initial marketing
for the DEXTM camera has concentrated on the pharmaceutical sector.  We have in
a relatively short time frame commenced work with two customers requiring X-ray
inspection of blister packs and these collaborations are anticipated to move
towards funded feasibility trials during the second quarter of 2004.  Quotations
for more conventional inspection units used for tasks such as screening of
waste, which are based on the 2DX-CameraTM, have been issued in recent months
with the first commercial sales also anticipated for early 2004.  Significant
quotations and enquiries generated since the product launch are being pursued at

We are also pleased to announce the appointment of our first agent for
industrial sales, Mr Massimo Bonfante, who will represent the Company's products
in Italy.  Following an initial sales tour in Italy in November this year, the
Company is now addressing a number of active leads.

Our patented VIXion(R) system will be used for rapid and cost effective customer
evaluations to enable prompt turnaround from enquiry to quotation.


The Company's prime focus over the next twelve months is to turn its current
product range into sales, although as an innovative company we are continually
looking at the enhancement of our technology portfolio through new focused
development programmes.  The two most significant new areas of interest are:


The Company is in discussion with a number of potential collaboration partners
to combine its advanced X-ray imaging systems with complementary technologies
(such as Thermal Neutron Analysis, X-ray scatter, RF detection and novel vapour
and trace systems) to produce hybrid systems that can address the stated
Transport Security Administration's (TSA) objectives of improving the automation
of threat detection for both carry-on and checked baggage.


The successful introduction in modularisation of our hardware over the last six
months has ensured that we have a minimal risk and rapid approach to meeting
customers' application requirements.  However, within the industrial sector in
particular, there is a similar need to have the same modularisation and rapid
development tools for our software solutions.  Taking a novel approach to
systems development, the Company has embarked on the creation of a rapid
development tool for our software applications, to be called XeroPoint.

On a more general marketing note, the Company has been disappointed at the slow
and often unfocused nature of regulatory driven third party trials of our
security technology in the aviation sector.  To address

this, the Board has agreed to initiate its own Cost Benefit Analysis (CBA) which
will objectively compare and enumerate the benefits of 2D versus 3D X-ray
imaging system.  Although an internal initiative, we believe, that the CBA will
be endorsed by aviation sector regulators both here in the UK and equally
importantly within the USA. Our discussions with the Department for Transport
lead us to conclude that they are positive about the technology and keen to
support it.  We have also been advised that 3D technology has been placed on a "
fast track" development and implementation programme within the TSA.  The CBA,
which started in November 2003, is anticipated to be completed in April 2004 and
is designed to quantitatively demonstrate the improvements in probability of
reducing false alarms, probability of detection and the improvement in time to
operator competency (effectively how long it takes to train a new screener) of
the AXIS-3D(R) system.


This year has seen a number of staff changes both at Board and operational
level.  The non-executive directors Mr Savage, Mr Robertson and Mr Tipple
(chairman) have resigned their seats on the Board and Mr Johnson has taken on
the role of interim non-executive Chairman.  This will allow the Company time to
find new candidates to fill this role and recruit a third non-executive Board

We are pleased to announce the addition of Mr Gibbs as a full time member of the
Executive board, taking on the joint role of Chief Financial and Operating
Officer.  This combined role will release Mr Fox, Chief Executive Officer, from
some operational duties and enable him to focus on the key role of market

At the operational level, our staffing remains relatively constant, although
roles have changed to reflect the Company's increased emphasis on product
marketing and sales delivery.  Although staff numbers will be governed by actual
sales levels it is anticipated that there will be a modest increase in staffing
over the next twelve months, as the commercialisation of our product range

We would like to thank the staff for all their efforts, dedication and
flexibility shown over the last year.

Financial Results and Accounting Policy

Sales for the year were marginally ahead of 2002 at #510,000.  As a consequence
of the sales mix in the year, the gross margin at 23.7% was significantly lower
than the 47.7% recorded in 2002.  The gross profit is not expected to remain at
the low 2003 level as commercial sales in both sectors are due to commence in
the current year.

Last year we reported that overheads in the second half of 2002 were #450,000
giving an annual run rate of #900,000.  In this year overheads have risen to
#961,000.  This increase is a direct result of the use of an interim manager to
secure rapid internal engineering sign off on the AXIS-3D(R) system plus the
support costs of the Rapiscan pre launch promotion campaign.

Included in overheads is the internally funded research and development
expenditure which is #150,000 (2002: #118,000).  All research and development
costs are expensed as incurred in accordance with the group accounting policy.

The loss for the year, after R&D tax credits amounts to #788,000 (2002:
#603,000), being a loss per share of 4.9p (2002: 4.0p).  In accordance with
current policy there is no dividend.

The balance sheet shows a net increase in tangible fixed assets of #113,000
being primarily the DEX industrial unit and the VIXion(R) system.  The remaining
elements of the balance sheet reflect the lower second half activity at the
sales level with reduced working capital creating positive cash flows of
#508,000 to offset the loss in the year.  After accounting for the bank loan of
#92,000 (2002: #128,000) the net cash sum at the year end was #118,000 (2002:

Shareholders funds at #283,000 (2002: #1,071,000) received a boost on 29th
October when shareholders at an EGM approved a placing which raised #1,080,000
at 35p per share.  The net sum of #986,885 has increased cash balances
accordingly, and there are now 19,335,630 shares in issue.  The shareholder
circular outlined the reasons for the placing and set out the Board's plans for
this current fiscal year.

With the Rapiscan AXIS-3D(R) product launch now set for early January and normal
industry lead times of eight to ten weeks it is unlikely that significant sales
revenue will be forthcoming until the second half of 2004.   Whilst industrial
sales prospects are looking promising the Board's view is that expectations for
the full year will depend on the rapidity of the market take up of the AXIS-3D
(R) system in the Rapiscan product, and that this is unlikely to be ascertained
until the half year.

To mitigate the effect of possible slippage, we have embarked on an aggressive
marketing campaign to attract new security based OEM customers requiring new and
upgraded 2D systems.  We expect to have positive results to announce in this
regard in the early part of 2004.

I S S Johnson                                           N D Fox
Chairman                                                Chief Executive Officer


30 September 2003

                                                  Note                                   2003             2002
                                                                                            #                #

TURNOVER                                                                                 509,750       502,697

Cost of sales                                                                          (389,016)     (262,840)

Gross profit                                                                             120,734       239,857

Administrative expenses                                                                (960,507)     (875,575)

OPERATING LOSS                                                                         (839,773)     (635,718)

Interest receivable                                                                        8,219        13,304

Interest payable                                                                         (7,164)      (42,193)

LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION                                            (838,718)     (664,607)

Taxation                                                                                  50,419        61,748

SHAREHOLDERS                                                                           (788,299)     (602,859)
Dividends                                                                                      -             -

RETAINED LOSS FOR THE FINANCIAL YEAR                                                   (788,299)     (602,859)

Retained reserves brought forward                                                    (2,002,344)   (1,399,485)

Revenue reserves carried forward                                                     (2,790,643)   (2,002,344)

                                                                                           Pence         Pence

Earnings per share
Basic and diluted loss per share                  (i)                                        4.9           4.0


                                                                                                       2003       2002
                                                                                                          #          #

Loss for the year                                                                                   788,299    602,859

Weighted average number of ordinary shares in                                                    16,250,203 15,061,611

Basic and diluted earnings per share                                                                  (4.9)      (4.0)

FRS14 requires presentation of diluted earnings per share (EPS) when a company
could be called upon to issue shares that would decrease net profit or increase
net loss per share.  For a loss making company with outstanding share options,
net loss per share would only be increased by the exercise of out-of-the-money
options.  Since it seems inappropriate to assume that option holders would act
irrationally and there are no other diluting future share issues, diluted EPS
equals basic EPS.


30 September 2003

                                                                                         2003          2002
Contents                                                                                    #             #
Tangible fixed assets                                                                 222,259       109,050
Intangible fixed assets                                                               178,310       192,460

                                                                                      400,569       301,510

Stock and work in progress                                                             26,957        69,931
Debtors                                                                               127,717       370,220
Short term investments                                                                      -        42,924
Cash at bank and in hand                                                              209,655       535,197

                                                                                      364,329     1,018,272

CREDITORS: amounts falling due
   within one year                                                                  (427,251)     (157,664)

NET CURRENT ASSETS/(LIABILITIES)                                                     (62,922)       860,608

TOTAL ASSETS LESS CURRENT LIABILITIES                                                 337,647     1,162,118

CREDITORS: amounts falling due after more
than one year                                                                        (54,670)      (90,842)
                                                                                      282,977     1,071,276

Called up share capital                                                               162,502       162,502
Share premium account                                                               2,911,118     2,911,118
Profit and loss account                                                           (2,790,643)   (2,002,344)

EQUITY SHAREHOLDERS' FUNDS                                                            282,977     1,071,276


Year ended 30 September 2003

                                                                               Note                    2003        2002
                                                                                                          #           #

Net cash outflow from operating activities                                     (i)                 (237,724)   (797,227)

Returns on investments and servicing of finance
Interest received                                                                                      8,219      13,304
Interest payable                                                                                     (7,164)    (42,193)

                                                                                                       1,055    (28,889)
Corporation tax recovered                                                                             97,389           -

Capital expenditure and financial investment
Purchase of tangible fixed assets                                                                  (189,360)    (74,651)
Purchase of intangible fixed assets                                                                  (3,655)    (16,291)

                                                                                                   (193,015)    (90,942)

Net cash outflow before management of liquid                                   (ii)                (332,295)   (917,058)

Management of liquid resources
Withdrawal of short term deposits                                                                     42,924     370,544

Issue of ordinary share capital                                                                            -   1,649,957
Bank loans repaid                                                                                   (36,171)    (37,363)
Other loans repaid                                                                                         -   (516,840)

                                                                                                    (36,171)   1,095,754

Increase/(decrease) in cash in the year                                       (ii), (iii)          (325,542)     549,240

Year ended 30 September 2003

                                                                                             2003          2002
                                                                                                #             #

Operating loss                                                                          (839,773)     (635,718)
Depreciation                                                                               76,151        53,893
Amortisation                                                                               17,805        17,500
Research and development written off                                                            -        71,345
Decrease/(increase) in stock                                                               42,974      (48,934)
Decrease/(increase) in debtors                                                            195,533     (279,262)
Increase in creditors                                                                     269,586        23,949

Net cash outflow from operating activities                                              (237,724)     (797,227)

Year ended 30 September 2003

                                                                              2003        Other
                                                                              Cash     non-cash
                                                                  2002        flow      charges         2003
                                                                     #           #            #            #            

Cash at bank and in hand                                       535,197    (325,542)                   209,655

Debt due within one year                                      (37,363)       36,171     (36,171)     (37,363)
Debt due after one year                                       (90,841)            -       36,171     (54,670)


Current asset investments                                       42,924     (42,924)                         -

                                                               449,917    (332,295)            -      117,622

                                                                                         2003         2002
                                                                                            #            #

(Decrease)/Increase in cash in the period                                            (325,542)      549,240
Cash outflow from decrease in debt                                                      36,171      554,203
Cash outflow from decrease in liquid resources                                        (42,924)    (370,544)

Change in net debt resulting from cash flows                                         (332,295)      732,899

Net debt at 1 October                                                                  449,917    (282,982)

Net funds at 30 September                                                              117,622      449,917


1.  The financial information set out above does not constitute the Company's 
    statutory accounts for the years ended 30 September 2002 and 30 September 
    2003 but is derived from those accounts.  Statutory accounts for 2002 have 
    been delivered to the Registrar of Companies, and those for 2003 will be
    delivered following the Company's Annual General Meeting.  The auditors have
    reported on those accounts; their reports were unqualified and did not 
    contain statements under section 237(2) or (3) of the Companies Act 1985.

    The financial information has been prepared in accordance with the 
    accounting policies adopted for the 2002 accounts.

2.  The financial statements for the year ended 30 September 2003 will be posted 
    to shareholders in February 2004 and will also be available thereafter at 
    the registered office, Pera Innovation Park, Nottingham Road, Melton 
    Mowbray, Leicestershire, LE13 0PB.

3.  The Annual General Meeting will be held on Thursday 25 March 2004, at the 
    registered office, Pera Innovation Park, Nottingham Road, Melton Mowbray, 
    Leicestershire, LE13 0PB, commencing at 10.00am.

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