Interim Results

Image Scan Holdings PLC
21 May 2007


                                  21 MAY 2007

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



             INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2007



 Significantly increased turnover and a reduced loss edges the Company towards
                                 profitability



The Board of Image Scan, a world leader in the field of real-time 3D and 2D
x-ray imaging for the 'Homeland Security' and 'Industrial Inspection' markets,
announces interim results for the six months ended 31 March 2007.



HIGHLIGHTS



  • Company approaching break-even;
  • Loss before tax down to  £60,000 (2006: £278,000);
  • Loss per share down to 0.17p (2006: 0.80p);
  • Turnover up 50% to £1,133,000 (2006: £755,000);
  • Gross margin strengthened to 50% (2006: 45%);
  • Three-fold increase in order book to £945,000 (2006: £253,000);
  • Ongoing sales with Blue Chip clients such as British Nuclear Group &
    Johnson Matthey; and
  • Placing agreed in May to raise £3m before expenses.





Commenting on the results, Peter Woods, Chairman, stated: 'The Board is pleased
with the improvement in the Company's financial results as it moves towards
profitability, and at the high level of interest shown by both the Industrial
and Security markets in our products and technology.



'The Company is seeking to raise £3m in order to provide the necessary resources
and working capital to optimise the opportunities we have created and accelerate
future growth.'





Enquiries:



Image Scan Holdings plc                    Tel: [phone]
Peter Woods, Chairman
Nicholas Fox, CEO
[e-mail]


Bishopsgate Communications Ltd             Tel: [phone]
Dominic Barretto
Jenni Herbert
[e-mail]


Seymour Pierce Ltd                         Tel: [phone]
David Newton
[e-mail]



For further information on the Company, please visit: www.ish.co.uk - and for
further information on its products, please visit: www.3dx-ray.com.




CHAIRMAN'S STATEMENT





Introduction

I am pleased to present the interim results of Image Scan for the six months
ended 31 March 2007, and the Board's view of the Company's prospects for the
remainder of this financial year.



Image Scan continues to be focused on the development and commercialisation of
market leading real-time 3D and 2D x-ray solutions for use in the global
industrial and security inspection markets. The Company's industrial inspection
solutions include the MDXi unit and the X-Line systems. The security portfolio
includes a unique 3D baggage inspection system for corporate and airport
security and TPXi, a portable suspect package inspection system for use by bomb
disposal experts.



Financial Results

Sales for the six months have increased by 50% to £1,133,000 (2006: £755,000),
reflecting our ongoing relationship with blue chip companies, such as Johnson
Matthey and British Nuclear Group.  Over the same period the Company has
maintained its tight control over costs, with overheads being contained at
£614,000 (2006: £619,000).  In addition, the increased efficiencies associated
with higher activity have allowed us to improve our gross margin to 50% (2006:
45%).



The Board continues to invest in R&D.  Total R&D expenditure stood at £188,000
(2006: £91,000) but due to the changes required by the international accounting
standards, £156,000 of this has been capitalised and will be written off against
commercial sales of MDXi-NT and TPXi.



The Company moved closer to break-even with the loss for the period down to
£60,000 (2006: £278,000), a loss per share of 0.17p (2006: 0.80p).



During the period the Company issued £400,000 9% loan stock and negotiated a
payment deferment on the existing £200,000 loan stock.  All loan stock is now
repayable on 30 September 2008 and has warrants to subscribe for 3,000,000
shares at 20p.  A £100,000 overdraft facility was agreed with the Royal Bank of
Scotland plc in December 2006.  At 31 March 2007 the bank balance was £58,000.

Commercial Overview



Industrial

Industrial sales were dominated by two significant contracts.  The Company is
installing the new MDXi-NT system into the Johnson Matthey UK and South African
sites, and is developing an in-line inspection system for one of the British
Nuclear Group's manufacturing plants.  Both contracts are still in progress with
further revenue falling into the second half of the year.



Funded feasibility work has also been carried out for several other blue-chip
companies and negotiations with these organisations are well underway for full
development contracts.  In line with the Company's business model, it is
anticipated that each of these potential new contracts will lead to repeat
orders.



Earlier this year, a dedicated support group was created within the Company to
service the needs of our growing installed base of industrial systems.  This new
profit centre has already secured orders approaching £200,000, representing a
mix of critical spares and annual maintenance contracts.



Security

Market interest in the TPXi-675 portable x-ray imaging system remains strong.
During the period several orders were received for evaluation units from which
it is anticipated multiple repeat orders will arise within the next two years.
To cope with the expected increase in demand, the Company has negotiated an
outsourcing contract for the manufacture of TPXi-675 systems to both improve
delivery times and reduce manufacturing costs.



Following the development of a 2D baggage scanning system with Eurologix Ltd
(formerly Scanlogik Technology Ltd.), the system was exhibited in the USA in
April.  Considerable interest was generated and the sales subscribed to under
our licence agreement are now expected to develop.



Marketing

The Company has been working closely with the distributors appointed last year
to maximise the potential sales arising under these existing agreements.  Two
further distributorships have been negotiated.  Within the industrial sector,
VOGT Werkstoffpruefsysteme GmbH has already attended a number of key exhibitions
in Germany, and X-metrix LLC will commence their marketing campaign in the USA
early June.



As a result of the higher level of interest in our products arising from
increased exhibition attendance and on-going trade press activity, we have
recently strengthened the applications team to enable us to more efficiently
respond to these opportunities and to support our future sales.

Staff

The Board is delighted at how well staff has reacted to the increased pressures
of meeting our customers needs and their continued dedication to both the
technology and our Company.  The Board would like to extend its sincere
appreciation of this commitment.

Outlook

At the end of March the order book was £945,000 (2006: £253,000).  Looking
forward, the prospects for the Company remain strong with increasing interest in
Image Scan's products and opportunities for significant long term sales
improving as we complete a series of funded feasibility studies for a number of
new clients.



To ensure we keep our technology ahead of our competitors we shall also maintain
our investment in R&D targeted towards enhancing our existing and developing new
products to meet market needs.  Where appropriate the Company will seek to
formally protect its IP as in the recent patent application relating to our TPXi
product.  A significant programme of work to be initiated during the second half
of our financial year will be a value engineering exercise to reduce prime costs
within the TPXi and MDXi product ranges.



To provide the necessary resources and working capital to achieve the strategic
objectives of the Company and to accelerate future growth, the Company is
seeking to raise £3 million before expenses.



Peter Woods

Chairman

21 May 2007






Unaudited Consolidated Profit & Loss Account


                                         6 months to             6 months to            Year to
                                         31 March 2007           31 March 2006          30 September 2006
                                        (Unaudited)             (Unaudited)             (Audited)
                                         £'000                   £'000                  £'000
Turnover                                 1,133                   755                    1,422
Cost of sales                            (563)                   (416)                  (705)

Gross profit                             570                     339                    717
Administration expenses                  (614)                   (619)                  (1,220)

Operating loss                           (44)                    (280)                  (503)
Interest received                        1                       2                      4
Interest payable                         (17)                    -                      (9)

Loss on ordinary activities before
taxation                                 (60)                    (278)                  (508)
Taxation                                 -                       -                      37

Loss on ordinary activities after
taxation                                 (60)                    (278)                  (471)



Loss per share: 
Basic and fully diluted                  (0.17)p                 (0.80)p                (1.3)p





Unaudited Consolidated Balance Sheet


                                         31 March 2007           31 March 2006        30 September 2006
                                         (Unaudited)             (Unaudited)          (Audited)
                                         £'000                   £'000                 £'000
Fixed Assets
Tangible assets                          199                     119                   174
Intangible assets                        171                     17                    16
                                         370                     136                   190

Current assets
Stock and work in progress               94                      77                    83
Debtors                                  341                     351                   384
Cash at bank and in hand                 58                      40                    164
                                         493                     468                   631

Creditors - amounts falling due
within one year                          (437)                   (538)                 (742)
Net current assets/(liabilities)         56                      (70)                  (111)

Total assets less current liabilities    426                     66                    79

Creditors - amounts falling due
after more than one year                 (600)                   -                     (200)
Provisions for liabilities and charges   (29)                    (29)                  (22)

Net assets                               (203)                   37                    (143)

Capital and reserves
Called up share capital                  349                     349                   349
Share premium account                    4,671                   4,660                 4,671
Profit and loss account                  (5,223)                 (4,972)               (5,163)

Equity shareholders' funds               (203)                   37                    (143)




Unaudited Consolidated Cash Flow Statement


                                             6 months to             6 months to           Year to
                                    Notes    31 March 2007           31 March 2006         30 September 2006
                                             (Unaudited)             (Unaudited)          (Audited)                     
                                              £'000                  £'000                 £'000
Net cash outflow from operating
activities                            (a)    (279)                  (183)                 (146)

Returns on investments and servicing of
finance
Interest received                             1                      2                     4
Interest paid                                 (17)                   -                     (9)
                                              (16)                   2                     (5)

Taxation
Corporation tax recovered                     -                      30                    30

Capital expenditure and financial investment
Purchase of tangible fixed assets             (55)                   (12)                  (136)
Purchase of intangible fixed assets           (156)                  -                     -
Receipts from sales of tangible fixed assets  -                      -                     72
                                              (211)                  (12)                  (64)

Net cash outflow                              (506)                  (163)                 (185)

Financing
Issue of ordinary share capital               -                      -                     12
Bank loans repaid                             -                      (11)                  (17)
Other loans issued                            400                    60                    200
                                              400                    49                    195

Increase in cash in the period         (b)    (106)                  (114)                 10


Note (a) Reconciliation of operating cash flows

Operating loss                                (44)                   (280)                 (503)
Depreciation                                  30                     49                    97
Amortisation                                  1                      1                     2
Profit on sales of tangible fixed             -                      -                     (52)
asset
Decrease/(increase) in stock and work in      (11)                   18                    12
progress
(Increase)/decrease in debtors                43                     (40)                  (36)
Increase in creditors                         (298)                  69                    334

Net cash outflow from operating activities    (279)                  (183)                 (146)




Unaudited Consolidated Cash Flow Statement (continued)


Note (b) Analysis of net debt
                                     1 October 2006          Cash flow             31 March 2007
                                     £'000                   £'000                 £'000

Cash at bank and in hand             164                     (106)                 58
Debt due within one year             (200)                   (400)                 (600)
                                     (36)                    (506)                 (542)




Reconciliation of Movement in Shareholders' Funds


                                     6 months to              6 months to             Year to
                                     31 March 2007            31 March 2006           30 September 2006
                                     (Unaudited)              (Unaudited)             (Audited)
                                     £'000                     £'000                  £'000

Opening shareholders' funds          (143)                     315                    315
Issue of shares - at par             -                         -                      1
Issue of shares - share premium      -                         -                      11
Loss attributable to members         (60)                      (278)                  (470)
                                     (203)                     37                     (143)




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 2006, with the exception of the research and
development accounting policy.



From 1 October 2006, the Company has dealt with research and development
expenditure in accordance with IAS 38; such expenditure was previously accounted
for under UK GAAP. Development expenditure that meets the criteria for
recognition as an asset has been included in intangible assets. The total
capitalised in this interim statement amounted to £156,000.



(b)        The interim statement is neither audited nor reviewed. The figures
for the year ended 30 September 2006 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 £60,000 and on 34,948,120 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




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