Image Scan Holdings Regulatory News (IGE)

17 October 2016

Image Scan Holdings plc

("Image Scan" or the "Company")

PRE-CLOSE TRADING UPDATE

Image Scan, (AIM: IGE) specialists in the field of real-time X-ray imaging for the Security and Industrial Inspection markets, today provides a pre-close trading update ahead of its results for the year ended 30 September 2016.

Key Points:

· Sales of £3.3m (2015: £1.7m) at a gross margin of 42% (2015: 38%)

· Pre-tax trading profit of approximately £0.1m (2015: loss of £0.64m)

· 75% of an order for ThreatScan®-LS1 portable X-ray systems, previously announced on 30th June 2016, was delivered before year end

· In the final quarter of the period sales of portable X-ray systems were also made to customers in Europe, the Middle East and North Africa

· Government grant-assisted project to develop a new generation of portable X-ray systems reached prototype stage

· Industrial sales increased, driven by higher demand from key automotive industry customers

· Total order intake for the year of £4.3m

· Outstanding order book at the end of the period of £1.7m (2015: £0.67m)

· £1m cash balance at the end of the period (H1 2016: £0.53m)

The quantity of Portable X-ray systems sold showed a threefold increase on the prior year, driven by large orders for ThreatScan®-LS1 systems from government customers in Asia. The final weeks of the period saw significant progress in both the supply chain and internal manufacturing which allowed the previous forecast for assembly and test of these systems to be exceeded. Total security sales were £2m (2015: £1.2m).

Industrial sales, were £1.3m (2015: £0.5m) as further orders were added to the strong order book at the start of the year and customer funded development projects were completed.

Total Company sales for the year were £3.3m (2015: £1.7m). An improvement in gross margin to 42% (2015: 38%) was driven by manufacturing and supply chain efficiencies, enabled by the increased volume of sales and a favourable change in product mix. A small increase in overheads of around £0.1m was attributable to greater investment in research and development and sales and marketing. The resulting unaudited pre-tax profit for the business was approximately £0.1m (2015: loss of £0.64m).

The ThreatScan®-LS1 portable X-ray system was widely demonstrated and trialled during the period, notably at international Explosive Ordnance Disposal (EOD) gatherings in Asia and North America. The system performed well in these high pressure scenarios which will provide access to extensive new opportunities. A wide range of accessories have been developed and delivered to customers. The development of the next generation of Image Scan portable X-ray systems, under an award from Innovate UK, a UK Government body, is well advanced. The new technology licensed from Ibex innovations specifically for this project is performing well in the first prototype.

An agreement was signed with Todd Research Limited for Image Scan to market that Company's Mail Scan X-ray systems and two separate orders were received. Campaigns to sell further systems are underway in a number of parts of the world.

Alongside increased deliveries of our industrial systems, used for inspecting catalytic converters in the automotive industry, a number of customer-funded development projects lead to significant performance enhancements. Potentially important IP was generated that could lead to further developments in this profitable part of the business.

A complex X-ray system provided to a customer in the nuclear industry, a project which had adversely impacted the Company's results for a number of years, reached the end of its warranty period and a maintenance contract was put in place.

The Company expects to announce its preliminary results in December.

Image Scan's Chairman and Chief Executive, Bill Mawer, commented: "I am delighted by these results as they demonstrate how attractive our recently developed products are to the market and illustrate the significant advances we have made in the management of our supply chain and manufacturing processes. It is pleasing that both the security and industrial business activities have made progress in the year. Our strong order book and cash positions point to continued good performance in the short term while our strong product pipeline and the expanding customer base indicate a strong future for the Company. This is an exciting time for Image Scan and the immediate task is to continue the momentum we have built up this year."

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

-ENDS-

For further information, please contact:

Image Scan Holdings plc Tel: +44 (0) 1509 817400

William Mawer, Chairman

Sarah Atwell-King, Company Secretary

ir@ish.co.uk

Cantor Fitzgerald Europe Tel: +44 (0) 207 894 7000

Rick Thompson / David Foreman / Michael Reynolds (Corporate Finance)

David Banks / Alex Pollen (Sales)

About Image Scan Holdings plc

Image Scan Holdings plc (AIM: IGE) is focused on the development and commercialisation of market leading real-time X-ray solutions for use in the global Security and Industrial inspection markets. The Company's Security portfolio includes the ThreatScan® range of portable bomb and suspect package detection systems; the Axis range of baggage inspection systems; and SVXi, a small vehicle inspection system. The Industrial inspection solutions include the MDXi product range, cabinet X-ray systems for laboratories and production lines. The Company was founded in 1996 and joined AIM in 2002.

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