Interim Results

IMAGE SCAN HOLDINGS PLC
("Image Scan" or the "Company")
INTERIM RESULTS
FOR THE SIX MONTHS ENDED
31 MARCH 2006

Image Scan, a leading provider of x-ray imaging technologies for the security and industrial inspection markets
announces interim results for the six months ended 31 March 2006.

Key Points


*    Sales £755,000 2005: (£109,000);

*    Security & industrial sector sales developing well and prospects broadening;

*    Loss on ordinary activities before taxation £278,000 (2005: £542,000);

*    Marketing & sales organisation materially strengthened;

*    Successful launch of TPXi, portable suspect package and bomb detection system, resulting in:

     *  Sales of £254,000 to the British Transport Police, Home Office, ICM and Ketech, and
     *  Appointment of two distributors with minimum sales commitments of £2.7M over 3 years;

*    Licence agreement commenced with Scanlogik Ltd for baggage screening software;

*    Order book currently stands at £267,000, which with the commitments of newly appointed distributors     provides  a
 sound  platform  for  achieving profitability in 2007.


Nick Fox, Chief Executive Officer comments,"Our long term investment in technology and the recent extensive expansion in
our marketing activities have provided a solid base for our sales that should see growth in opportunities for the
company and deliver real benefits to our investors. It is immensely pleasing to see the hard work and difficult
decisions over the last few months coming to fruition in such a positive manner."

For further information:

Nicholas Fox Chief Executive   01664 503 600
Peter Woods Chairman           01664 503 600
Gerry Palmer Palmer & Rose     01494 637499
Nick Maslen KBC Peel Hunt Ltd  0121 698 8505

CHAIRMAN'S STATEMENT


Introduction

I am pleased to present the interim results of Image Scan Holdings plc for the six months ended 31 March 2006 and the
Board's view of the Company's prospects for the remainder of this financial year.

Financial Results

Sales for the six months of £755,000 (2005: £109,000)reflect the success of the company in attracting orders for a range
of products from a growing number of blue chip companies, and in delivering innovative solutions.  Sales are now evenly
balanced between the security and industrial sectors following a year in
which industrial sales were dominant.

The gross margin of 45%(2005: 50%)reflects the investment in developing the distribution network and future sales
opportunities as demonstration equipment has been supplied to our three new trading partners and proof of concept work
has been carried out for a potential contract at cost. The Board anticipates a
substantial improvement in gross margin as sales increase.

Overheads were £619,000 (2005: £590,000). The cost cutting exercise in the first half of 2005 enabled the company to
invest in a much strengthened sales and marketing team and increased attendance at exhibitions with little increment in
the underlying overheads.  We continue to invest in research and development
to protect and develop our technology with expenditure at £91,000 (2005: £66,000).

The loss for the period was £278,000 (2005: £542,000), a loss per share of 0.8p (2005: 2.80p).

In March 2006 the Company issued £200,000 9% loan stock repayable within 12 months with warrants to subscribe for up to
909,090 ordinary shares at 22p within twelve months. Of this £200,000 facility, £60,000 had been drawn down at 31st
March 2006.  During the period, bank loans were reduced by £11,000 to
£6,000.  At 31st March 2006 the bank balance was £40,000.

Commercial Overview

Security

The launch of the TPXi,a portable suspect package and bomb detection system, was enthusiastically received. Orders to
date exceed £250,000, including four units supplied to the British Transport Police. The Company has appointed two
distributors: UK-based Ketech Defence Ltd (`Ketech')and Belgium-based Industrial Control Machines S.A. (`ICM') who
between them cover the UK, Japan, Europe and the Middle East.  The two agreements jointly provide for minimum sales of
£2.7M over three years, with the first year of  their respective agreements having a total value of at least £460,000.

In October, the Company signed a new agreement with Rapiscan Systems Ltd (`Rapiscan') which gave rise to sales of
£150,000 of 3DX camera systems for their 3DSP baggage screening system in the half year and £195,000 towards on-going
research into advanced imaging technologies through to the end of 2007.
Other sales of the AXIS-3D® baggage screening systems included our first export to The Peoples Republic of China.

In recent weeks the Company has signed a licence agreement with Scanlogik Ltd for the development of imaging software
for their new baggage screening system, Vertigo.  The agreement is for a minimum contract period of five years and
includes a commitment of £480,000 within the first eighteen months.


Industrial

The Company has continued to work successfully with Johnson Matthey with two further X-Line inspection systems having
been installed on their production lines in the US and the UK. We are currently negotiating additional contracts for our
standard X-Line and MDXi systems for deployment in the UK and overseas.

We have also undertaken feasibility work for other industrial companies with whom negotiations are underway with good
prospects for new contracts over the medium to long term. This continuous broadening of market prospects is extremely
supportive to our sales growth in both the industrial and the security sectors.

Marketing

The Company has invested steadily in sales and marketing.  The interim sales and marketing manager, Robin Higgons has
continued to work closely with the Company throughout the period and is shortly to join the Board as Sales and Marketing
Director on a permanent basis.  A sales manager was recruited in November  2005 to provide process and further impetus
to our sales efforts.  This coupled with the attendance at five key exhibitions within the UK and Europe compared to
just two in 2005 and the appointment of three new trading partners has greatly strengthened the sales team.

Outlook

The Company has made considerable progress in the last six months by extending the customer base and continuing to
generate interest in our technology. There is now international representation for the baggage screening technology
through Rapiscan and Scanlogik and for the TPXi system through Ketech and  ICM.  Our ability to market the industrial
inspections systems ourselves has been successful, and we intend to take this a stage further with the appointment of a
German based distributor in the coming months, followed later by other European coverage.

The order book currently stands at £267,000 with further contracts currently being negotiated. In addition, our
distribution and licence agreements provide order commitment for over £1.2M within the next  eighteen months.  This is
creating a sound platform for making excellent progress in 2007 and begins to
reflect the benefit of the sales and marketing investments incurred in 2006.

Other Matters

Following  his resignation from the Board in May, I should like to thank Peter Hughes for his valuable contribution over
the last year.  I would also like to express my appreciation for the continuing commitment of the staff to providing and
supporting our world-class imaging systems which will enable the Company to realise its full commercial potential.

Peter Woods
Chairman
12 June 2006

Unaudited Consolidated Profit & Loss Account

                                 6 months to         6 months to                 Year to
                               31 March 2006       31 March 2005        30 September 2005
                                  (Unaudited)         (Unaudited)               (Audited)
                                       £'000               £'000                   £'000

Turnover                                 755                 109                     843
Cost of sales                           (416)                (55)                   (444)

Gross profit                             339                  54                     399

Administration expenses                 (619)               (590)                 (1,116)

Operating loss                          (280)               (536)                   (717)

Interest received                          2                   1                       5

Interest payable                           -                  (7)                    (10)

Loss on ordinary activities
before taxation                         (278)               (542)                   (722)

Taxation                                   -                   -                      30

Loss on ordinary
activities after taxation               (278)               (542)                   (692)


Loss per share: Basic                  (0.80)p             (2.80)p                  (2.7)p
and fully diluted



Fixed Assets
Tangible assets                          119                 142                     156
Intangible assets                         17                  19                      18
                                         136                 161                     174

Current assets
Stock and work in progress                77                 271                      95
Debtors                                  351                  60                     341
Cash at bank and in hand                  40                  67                     154
                                         468                 398                     590


Creditors - amounts falling due
within one year                         (538)             (1,007)                   (428)

Net current assets/(liabilities)         (70)               (609)                    162

Total assets less current liabilities     66                (448)                    336

Creditors - amounts falling due
after more than one year                   -                  (6)                      -
Provisions for liabilities and charges   (29)                (13)                    (21)

Net assets                                37                (467)                    315


Capital and reserves
Called up share capital                  349                 193                     349
Share premium account                  4,660               3,883                   4,660
Profit and loss account               (4,972)             (4,543)                 (4,694)

Equity shareholders'funds                 37                (467)                    315


Net cash outflow from                   (183)               (157)                   (738)

operating activities - note (a)

Returns on investments and servicing of finance

Interest received                          2                   1                       5
Interest paid                              -                  (7)                    (10)
                                           2                  (6)                     (5)

Taxation
Corporation tax recovered                 30                   -                      21

Capital expenditure and financial investment
Purchase of tangible fixed assets        (12)                 (1)                    (71)
Receipts from sales of tangible            -                   -                       2
fixed assets
                                         (12)                 (1)                    (69)

Net cash outflow                        (163)               (164)                   (791)

Financing
Issue of ordinary share capital            -                   -                     932
Bank loans repaid                        (11)                (19)                    (37)
Other loans issued                        60                 200                       -
                                          49                 181                     895

Increase in cash in the period          (114)                 17                     104
- note(b)


Note (a) Reconciliation of operating cash flows

Operating loss                          (280)               (536)                   (718)
Depreciation                              49                  50                     105
Amortisation                               1                   1                       2
Decrease/(increase) in stock              18                (226)                    (50)
and work in progress
(Increase)/decrease in debtors           (40)                 86                    (185)
Increase in creditors                     69                 468                     108

Net cash outflow from operating         (183)               (157)                   (738)
activities


Note (b) Analysis of net debt
                              1 October 2005           Cash flow           31 March 2006
                                       £'000               £'000                   £'000

Cash at bank and in hand                 154                (114)                     40
Debt due within one year                 (17)                (49)                    (66)
                                         137                (163)                    (26)



Reconciliation of Movement in Shareholders' Funds

                                 6 months to         6 months to                 Year to
                               31 March 2006       31 March 2005       30 September 2006
                                  (Unaudited)         (Unaudited)               (Audited)
                                       £'000               £'000                   £'000

Opening shareholders' funds              315                  75                      75
Issue of shares - at par                   -                   -                     155
Issue of shares - share premium            -                   -                     777
Loss attributable to members            (278)               (542)                   (692)
                                          37                (467)                    315



Notes to the Unaudited Interim Statement

1    Basis of Preparation

(a)  The interim statement has been prepared in accordance with the accounting policies set out in the Company's Annual
Report and Accounts for the year ended 30 September 2005.

(b)  The interim statement is neither audited nor reviewed. The figures for the year ended 30 September 2005 do not
comprise statutory accounts for the purpose of section 240 of the Companies Act 1985 and have been extracted from the
Company's full accounts for that year, which received an unqualified Auditors' Report and did not contain a statement
under section 237(2)or(3)of the Companies Act 1985. The accounts have been filed with the Registrar of Companies.

(c)  Basic loss per ordinary share is based on the loss on ordinary activities after taxation of £278,000 and on
34,868,120 ordinary shares in issue throughout the period.

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.

2    Additional Copies

Further copies of the Interim Report are available from the Company's registered office, Pera Innovation Park,
Nottingham Road, Melton Mowbray,Leicestershire, LE13 0PB