FOR IMMEDIATE RELEASE

17 December 2003

SCIPHER PLC

Interim Results

The technology development and licensing company, Scipher plc, announces its
Interim Results for the six months ended 30 September 2003.

FIRST-HALF SUMMARY

Financial

  * Total revenue down by 12% to �8.8m, mainly impacted by sales setback at
    Secure Identification
   
  * Key New business revenues up by 1% to �7.8m representing 89% of total
   
  * Total operating loss increased by 6% to �5.7m (H1 2001/02: �5.4m)
   
  * Patent Licensing received payment of US$1.0m for services to Tulip
    Computers International
   
  * Banking facility being renegotiated following disposal of 3D Sound business
   
Management actions on cash

  * Placing and Open Offer raises �7.0m net of expenses
   
  * 3D Sound business sold, raises �3.4m net of expenses on 3 December 2003
   
  * Continuing cost reductions
   
  * Negotiations to transfer yet2.com and future funding requirements to its
    management
   
  * SpectraProbe and Purple Voice refinanced by partners
   
  * MicroVue cash burden under review
   
Dr Rudolph Burger, Chief Executive Officer, Scipher plc:

"The short time that I have been at Scipher has reinforced my belief that the
Company has created a number of businesses with substantial commercial
potential. The sale of our 3D Sound business demonstrates the way Scipher can
extract financial benefit from its expertise in developing and commercialising
intellectual property ("IP").

The core Scipher businesses going forward (TSSI, CRL Opto and QED) have
competitive products, good patent protection, and address large and growing
markets. It is now clear that Scipher spread its investment cash across too
many operations without sufficient attention to their ability to achieve
anticipated returns. In addition, its core businesses have frequently failed to
fulfil their financial plans. Going forward, Scipher needs to focus on its core
businesses and ensure that they are well managed and adequately capitalised.

With this in mind I am carrying out a review of all businesses and technologies
in Scipher's portfolio. This has two objectives. First, to re-evaluate each
operation's longer-term potential and its appropriateness in its present form
to Scipher's future. Secondly, to determine whether a change of business model
might advance both the level and pace of realising shareholder returns. The
outcome of this review and the new initiatives it reveals will be presented as
early as possible in 2004.

Action is already in hand to address the major cash drains on the business. As
announced today, owing to the performance of the yet2.com IP licensing website
falling short of our expectations, we have heads of agreement to allow its
management to take majority ownership and responsibility for its ongoing
funding. QED remains with Scipher as an international provider of patent
licensing and professional IP services."

Enquiries

Financial Dynamics:

James Melville-Ross 020 7831 3113

Juliet Clarke 020 7831 3113

Scipher plc:

Dr Ken Gray, Chairman 020 7831 3113 on Wednesday 17 December and 020 8848 6555
thereafter

Dr Rudy Burger, CEO 020 7831 3113 on Wednesday 17 December and 020 8848 6555
thereafter

Michael Kendon 020 8848 6444

The Interim Results announcement, presentation and additional information may
be seen at www.scipher.com

Chairman's Statement

Dr Kenneth W Gray CBE FREng

Introduction

"Trading in the first half of the year has continued to be affected by the
difficult conditions in the technology market. These conditions have impacted
our ability to grow our businesses and have also placed unexpectedly high
demands on our cash resources.

For this reason we undertook a fund raising in July and the sale of our 3D
Sound business earlier this month. We are also taking action to arrest the cash
drain from our MicroVue and yet2.com businesses - moves that will positively
affect our short-term cash position.

As regards the longer term, Rudy Burger, our new CEO, is currently undertaking
a review of Scipher's operations, with a view to determining the best way to
maximise returns for our shareholders.

Financial Review

As stated in last year's Annual Report, the fourth quarter of our 2003
financial year saw conditions in Scipher's high technology marketplace
deteriorate. Disappointingly, this reduced level of activity persisted through
the first half of the current year. In particular, technical issues resulted in
a delay in the rollout of a new �2.0m systems project from our Secure
Identification business. These issues have been overcome and the sales are now
progressing.

Despite this, New business increased slightly by 1% in the first half, to �7.8m
from �7.7m last time and accounted for 89% of total revenues (H1 2002: 78% (see
Table 1 below). This growth was lower than had been anticipated due mainly to
delayed Secure Identification sales. In the first six months, Scipher's total
revenues from all sources were �8.8m (H1 2002: �9.9m). The revenues from R&D
were �0.7m, as against �1.2m in the same period last year owing to the decision
by the Company to participate in fewer collaborative European Commission ("EC")
R&D programmes. The revenue contribution from our small Mature business
category was �0.3m (H1 2002: �1.0m), a decline in line with the age of the
technologies employed.

Such a decline in revenue growth has a particular impact on a Company like
Scipher that is growing new businesses from a comparatively small base. The
effect has been to delay the point at which individual businesses can reach the
critical mass where their own sales are sufficient to fund their activities.
This has continued to place unexpectedly high demands on the Company's cash
resources, which were bolstered during July 2003 by the successful Share
Placing and Open Offer ("Placing").

At the time of the Placing the Directors were of the opinion that, taking into
account the bank facilities available to the Group and the net proceeds of the
Placing, the Company and the Group would have sufficient working capital for
their present requirements, that is, for at least twelve months from the date
of admission. Since then and as reported elsewhere in this statement, the Group
has experienced poor operating results, which have had a significant negative
impact on its cash position. The Group has sought to offset this through the
disposal of its 3D Sound business, which was completed in December 2003,
raising a further �3.4m net of expenses.

The Group's operating performance led to the breach of its EBITDA covenant
contained in its �5.0m committed facility with the Bank of Scotland. The
Company is currently in discussions with the Bank who have indicated that part
of the Sensaura disposal proceeds will be utilised in reducing the available
facility. The Directors are confident of agreeing a revised on-demand facility
in excess of �3.5m on an ongoing basis and will make an announcement in respect
of its facility as soon as possible.

Consequently, this Interim statement has been prepared on the going concern
basis as the Directors are of the opinion that, on the basis of the continuing
support of the Group's bank and the further cost-saving initiatives, and a
marked improvement in its operating performance, the Group will have sufficient
financial resources for the foreseeable future.

The following actions are directed towards achieving this aim:

  * The July Placing delivered �7.0m cash to Scipher, net of expenses.
   
  * Since the period end, a further �3.4m cash, net of expenses, has been
    delivered through the divestment of the non-core 3D Sound business, giving
    rise to a profit on disposal of �2.3m. This transaction will be reflected
    in the full-year results.
   
  * As referred to at the Placing, Scipher continues to seek appropriate
    divestments of its non-core activities.
   
  * Heads of agreement have been reached to transfer the IP licensing website,
    yet2.com, and its ongoing funding requirements to its management
   
  * Scipher's associated companies, SpectraProbe and Purple Voice, have been
    recapitalised by further cash investments by AstraZeneca and IPC UK
    Holdings, our partners, respectively, in the joint ventures. In both cases
    there is no further cash obligation on Scipher.
   
On the operating side, Scipher's New business saw a small increase in turnover
to �7.8m despite the turbulence caused by cash constraints in the first four
months of the year during the run-up to the Placing and the disappointing
performance by Secure Identification.

Table 1

For the six months ended 30 September

                                       2003      2002      2001       FY2003
                                                                            
                                      �'000     �'000     �'000        �'000
                                                                            
New Business                          7,786     7,705     5,516       16,678
                                                                            
Mature Business                         297     1,011     1,219        1,947
                                                                            
R&D                                     706     1,223       817        1,760
                                                                            
Total                                 8,789     9,939     7,552       20,385

Table 2

For the six months ended 30 September

                                       2003      2002      2001       FY2003
                                                                            
                                      �'000     �'000     �'000        �'000
                                                                            
EBITDA                              (4,382)   (3,964)   (6,598)     (10,012)
                                                                            
Depreciation                          (670)     (659)     (660)      (1,390)
                                                                            
Amortisation                          (477)     (433)      (83)        (948)
                                                                            
Group operating loss                (5,529)   (5,056)   (7,341)     (12,350)

The overall results (Table 2) for the first half include losses totalling �0.6m
in respect of QED Inc., which was acquired as yet2.com in December 2002, and
property costs of �1.2m, which were not reflected in the previous period.

Cost control and cost reduction remains at the top of the Company's agenda. In
the period under review, headcount was reduced by 46.

Scipher is currently reviewing the basis on which overhead costs on certain R&D
projects performed by the Company on behalf of the EC are charged. These
contracts date back as far as 1996 and are being disputed by the EC as part of
its project administration procedures. The Company believes that it has
complied with the accounting rules as laid down by the EC and denies any
liability and is vigorously defending its position. For prudence a contingent
liability is referred to in note 6.

Operating Review

Secure Identification

The unexpected delays to a major new systems programme and low sales of core
products caused lower than expected New business revenues of �1.4m for the
period. Sales under this programme are now underway. Other positive commercial
developments include contracts by US licensee, Appleton Papers, for secure
documentation for Ford and for vehicle-licensing applications in three US
states. The successful rollout of the National Health Service 'smart-card'
project heralds potential sales of over �2.0m for extensions to the system that
are currently in negotiation. A �0.6m order from Korea for the mature
'Watermark' products was received in November.

Communications

The Communications operation, reorganised as a solutions-oriented business,
achieved �1.8m sales in the first half from its core markets of Education,
Defence, Health and Transport. Progress was maintained with Royal Mail to
provide wireless broadband data communications and a new multi-year contract
was recently signed. Important new contracts since the end of the period
include �0.6m in the Education sector. The promising market for community
wireless broadband applications in the UK is expected to grow over the coming
years.

Displays

CRL Opto progressed several new consumer product designs using our microdisplay
technology. These include rear-projection TV and front projectors. We have a
strong position in professional applications for defence training and
simulation. Continuing interest in our technology has led to the design of
projection engines incorporating our technology by UNEED Systems (South Korea),
ITRI (Taiwan), and Qubic Light (USA).

Patent Licensing

Patent Licensing delivered revenue of �2.0m in a market that exhibits
continuing growth. In the first half Scipher received US$1.0m for its services
in connection with the successful patent infringement litigation on behalf of
its client, Tulip Computers International. We announce today heads of terms to
transfer majority ownership of the yet2.com IP licensing website to its
management who will take responsibility for its ongoing funding. IP consulting
and licensing will remain the core of Scipher's Patent Licensing business.

Sensors

The Sensors business experienced sales growth in both its domestic and
industrial markets. It has secured new orders worth �0.75m from Sensotec Europe
and other customers in North America. There were increased sales in the
industrial sector to detector companies in Germany, Russia and North America.
Semi-automated manufacture is in place to meet the expected uplift in sales
during 2004/05.

Technology Generation

Revenue from this sector declined sharply, principally owing to the decision by
the Company to participate in fewer collaborative EC R&D programmes. However,
significant advances were made in techniques to perform chemical reactions in
controlled micro-environments, leading to new business opportunities. The
`Smart CCTV' system is now use at Gatwick airport and a major UK shopping mall.

3D Sound

During the first half, 3D Sound achieved sales of �1.3m from the licensing of
its 3D audio technology to makers of PC audio chips and technology providers
for game consoles. As mentioned in the Financial Review above, on 3 December
2003, the 3D Sound business and assets were sold to Creative Technology Ltd for
�3.4m net of expenses.

Board Changes

On 10 November, Dr Rudolph Burger was appointed as Scipher's Chief Executive
Officer. Rudy, 45, has over 20 years international business and entrepreneurial
experience in the information and communication technology sector and a proven
track record in translating advanced technology into profitable business
models. We welcome his arrival, which is already invigorating Scipher's
business approach.

In light of his appointment, the Board has agreed to change my role to that of
Non-executive Chairman, in which capacity I shall give Rudy every support in
the detailed re-examination of the Company's overall business and strategy.

I take this opportunity to express our great appreciation of the contribution
made over six years by Neil Pearce, who retired from the Board as a
Non-executive Director at the AGM on 18 September.

We announce today that Chris Mutter, who joined Scipher as Finance Director in
March 2001, is resigning from the Board with effect from 31 December. Chris has
made a major contribution to the business for which we are most grateful. We
have been active in seeking a suitable replacement for this position and are in
discussions with several candidates. Scipher's Financial Controller will
provide continuity during the interim period.

In addition, Dr Ashok Vaidya, an Executive Director since Scipher's formation,
has expressed his intention to retire from the Board on 31 December 2003. The
Board thanks Ashok for the substantial contribution he has made, both before
and after the Company's formation.

Outlook

The review being conducted by CEO Rudy Burger aims to determine how best to
accelerate Scipher's transition to profitability. This may require changes to
our business model. It is clear that where circumstances have affected the
established business plan of any of our operations, appropriate action must be
taken. We also continue to explore opportunities to capitalise on technologies
that we have successfully developed to a strong position in their market
sector.

The situation in the technology marketplace has begun to improve recently and
we expect to see this continue through the second half of the year. The actions
we are taking are aimed at putting each business in the best position to
capitalise its technology. While the longer-term prospects for trading and
market conditions remain difficult to predict, the actions we have in hand
enable us to be cautiously optimistic for Scipher's progress over the medium
term."

Dr Kenneth W Gray CBE FREng

Chairman, Scipher plc

Group profit and loss account

                                             Six months  Six months Year ended
                                                  to 30       to 30           
                                              September   September   31 March
                                                                              
                                                   2003        2002       2003
                                                                              
                                              Unaudited   Unaudited    Audited
                                                                              
                                      Note        �'000       �'000      �'000
                                                                              
Turnover                                                                      
                                                                              
Continuing operations                             7,523       9,232     19,005
                                                                              
Discontinued operation                  7         1,266         707      1,380
                                                                              
                                                  8,789       9,939     20,385
                                                                              
Less share of joint ventures                       (25)        (74)      (124)
                                                                              
Group turnover                                    8,764       9,865     20,261
                                                                              
Cost of sales                                   (3,735)     (5,045)   (11,103)
                                                                              
Gross profit                                      5,029       4,820      9,158
                                                                              
Administrative expenses                        (10,558)     (9,876)   (21,508)
                                                                              
Continuing operations                           (5,894)     (4,993)   (12,216)
                                                                              
Discontinued operation                  7           365        (63)      (134)
                                                                              
Group operating loss                            (5,529)     (5,056)   (12,350)
                                                                              
Share of operating loss in joint                   (70)       (201)      (328)
ventures                                                                      
                                                                              
Share of operating loss in associated             (114)       (150)      (396)
undertakings                                                                  
                                                                              
Total operating loss                            (5,713)     (5,407)   (13,074)
                                                                              
Profit on disposal of fixed assets                    -       3,592      3,598
                                                                              
Net interest (payable)                                                        
                                                                              
- Group                                           (337)       (342)      (668)
                                                                              
- Associated undertakings and joint                 (4)        (16)       (22)
ventures                                                                      
                                                                              
Amounts written off from investments                  -       (192)      (192)
                                                                              
Other finance charges                              (21)           -      (142)
                                                                              
Loss on ordinary activities before              (6,075)     (2,365)   (10,500)
taxation                                                                      
                                                                              
Taxation                                              -           -       (15)
                                                                              
Loss on ordinary activities after               (6,075)     (2,365)   (10,515)
taxation                                                                      
                                                                              
Minority interests                                  539         297        825
                                                                              
Loss for the period                             (5,536)     (2,068)    (9,690)
                                                                              
Loss per share                                                                
                                                                              
Basic and diluted                       2        (3.2p)      (2.3p)    (10.4p)

Statement of Group total recognised gains and losses

                                             Six months  Six months Year ended
                                                  to 30       to 30           
                                              September   September   31 March
                                                                              
                                                   2003        2002       2003
                                                                              
                                              Unaudited   Unaudited    Audited
                                                                              
                                                  �'000       �'000      �'000
                                                                              
Loss for the period                             (5,536)     (2,068)    (9,690)
                                                                              
Currency translation differences on                  21          23         13
foreign currency net investments                                              
                                                                              
Total recognised gains and losses for           (5,515)     (2,045)    (9,677)
the period and since last Annual                                              
Report                                                                        

Group balance sheet

                                              As at 30    As at 30       As at
                                             September   September            
                                                                      31 March
                                                  2003        2002            
                                                                          2003
                                                                              
                                             Unaudited   Unaudited     Audited
                                                                              
                                     Note        �'000       �'000       �'000
                                                                              
Fixed assets                                                                  
                                                                              
Intangible assets                                7,695       6,623       8,902
                                                                              
Tangible assets                                  4,137       5,215       4,762
                                                                              
Investment in associated                             -          94           -
undertakings                                                                  
                                                                              
Investments                                          -          98          84
                                                                              
Investments - own shares                             4           4           4
                                                                              
                                                11,836      12,034      13,752
                                                                              
Current assets                                                                
                                                                              
Stocks                                           1,471       1,969       1,436
                                                                              
Debtors - amounts falling due                    8,753      12,271      10,330
                                                                              
within one year                                                               
                                                                              
Debtors - amounts falling due                    2,372       2,450       2,227
                                                                              
after more than one year                                                      
                                                                              
Cash at bank and in hand                            82          43         275
                                                                              
                                                12,678      16,733      14,268
                                                                              
Creditors: amounts falling due                (12,609)    (13,375)    (17,313)
within one year                                                               
                                                                              
Net current assets                                  69       3,358     (3,045)
                                                                              
Total assets less current                       11,905      15,392      10,707
liabilities                                                                   
                                                                              
Creditors: amounts falling due after             (427)       (128)       (407)
more than one year                                                            
                                                                              
Provision for losses in associated               (394)       (608)       (206)
undertakings                                                                  
                                                                              
Provisions for other liabilities and             (754)       (429)       (486)
charges                                                                       
                                                                              
Net assets                                      10,330      14,227       9,608
                                                                              
Capital and reserves                                                          
                                                                              
Called-up share capital                          2,590         913       1,007
                                                                              
Share premium account                           50,322      40,084      43,334
                                                                              
Shares to be issued                                533       2,950       2,791
                                                                              
Capital redemption reserve                         149         149         149
                                                                              
Profit and loss account                       (44,009)    (30,862)    (38,494)
                                                                              
Shareholders' funds                    4         9,585      13,234       8,787
                                                                              
Minority interest (equity)                         745         993         821
                                                                              
                                                10,330      14,227       9,608

Group cash flow statement

                                            Six months  Six months  Year ended
                                                 to 30       to 30            
                                             September   September    31 March
                                                                              
                                                  2003        2002        2003
                                                                              
                                             Unaudited   Unaudited     Audited
                                                                              
                                                 �'000       �'000       �'000
                                                                              
Net cash outflow from operating activities                                    
                                                                              
Operating loss                                 (5,529)     (5,056)    (12,350)
                                                                              
Amortisation of intangible fixed assets            477         433         948
                                                                              
Depreciation of tangible fixed assets              670         659       1,390
                                                                              
Loss on disposal of fixed assets                     -           -         119
                                                                              
(Increase) / decrease in stocks                   (85)         278         527
                                                                              
Decrease / (increase) in debtors                 1,512       (524)         852
                                                                              
(Decrease) / increase in creditors             (2,188)       1,246     (1,565)
                                                                              
Increase in provisions                             291          12       1,196
                                                                              
                                               (4,852)     (2,952)     (8,883)
                                                                              
Returns on investments and servicing of                                       
finance                                                                       
                                                                              
Interest received                                   27         148         183
                                                                              
Interest paid                                    (354)       (463)       (916)
                                                                              
Interest element of finance lease rentals         (31)        (27)        (58)
                                                                              
                                                 (358)       (342)       (791)
                                                                              
Taxation                                             -           -        (15)
                                                                              
Capital expenditure and financial                    -      13,682      13,290
investment                                                                    
                                                                              
Net proceeds of sales of tangible fixed                                       
assets                                                                        
                                                                              
Purchase of tangible fixed assets                 (53)       (257)       (373)
                                                                              
                                                  (53)      13,425      12,917
                                                                              
Acquisitions and disposals                           -           -       (295)
                                                                              
Purchase of subsidiary undertakings                  -           -       2,849
                                                                              
Net cash acquired with subsidiary                                             
undertakings                                                                  
                                                                              
Proceeds of sales in joint ventures                  -           3           3
                                                                              
Investment in joint ventures                         -       (188)       (188)
                                                                              
Investment in associated undertakings             (72)        (81)       (118)
                                                                              
                                                  (72)       (266)       2,251
                                                                              
Net cash (outflow) / inflow before use of      (5,335)       9,865       5,479
liquid resources & financing                                                  
                                                                              
Financing                                                                     
                                                                              
Issue of shares                                  7,591          69          21
                                                                              
Share issue expenses                             (631)           -           -
                                                                              
Contributions from minority interests              463         207         539
                                                                              
Increase in borrowings                              18           -           -
                                                                              
Capital element of financial lease               (104)       (286)       (239)
payments                                                                      
                                                                              
Decrease in debt                                     -     (6,763)     (6,790)
                                                                              
Cash inflow / (outflow) from financing           7,337     (6,773)     (6,469)
                                                                              
Increase / (decrease) in cash in the             2,002       3,092       (990)
period                                                                        
                                                                              
Reconciliation of net cash flow to                                            
movement in net debt                                                          
                                                                              
Increase / (decrease) in cash in the             2,002       3,092       (990)
period                                                                        
                                                                              
Cash (inflow) / outflow from (increase) /         (18)       6,763       6,790
decrease in                                                                   
debt                                                                          
                                                                              
Movement in finance leases                         104         286         239
                                                                              
Exchange differences                              (10)           -        (28)
                                                                              
Movement in net funds in the period              2,078      10,141       6,011
                                                                              
Net debt at beginning of period                (5,836)    (11,847)    (11,847)
                                                                              
Net debt at end of period                      (3,758)     (1,706)     (5,836)

Notes to the financial statements for the six months ended 30 September 2003

1. Basis of preparation

The financial information for the six months ended 30 September 2003 is
unaudited and has been prepared in accordance with applicable accounting
standards and on the basis of the accounting policies set out in the statutory
accounts for the year ended 31 March 2003. The financial information for the
year ended 31 March 2003 is extracted from the statutory accounts for that
period, which have been delivered to the Registrar of Companies. The auditors'
opinion in those accounts was unqualified and did not include a statement under
section 237 (2) or (3) of the Companies Act 1985. These interim accounts were
approved by the Directors on 17 December 2003. The interim accounts do not
constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985.

At the time of the Placing the Directors were of the opinion that, taking into
account the bank facilities available to the Group and the net proceeds of the
Placing, the Company and the Group would have sufficient working capital for
their present requirements, that is, for at least twelve months from the date
of admission. Since then and as reported elsewhere in this statement, the Group
has experienced poor operating results, which have had a significant negative
impact on its cash position. The Group has sought to offset this through the
disposal of its 3D Sound business, which was completed in December 2003,
raising a further �3.4m net of expenses.

The Group's operating performance led to the breach of its EBITDA covenant
contained in its �5.0m committed facility with the Bank of Scotland. The
Company is currently in discussions with the Bank who have indicated that part
of the Sensaura disposal proceeds will be utilised in reducing the available
facility. The Directors are confident of agreeing a revised on-demand facility
in excess of �3.5m on an ongoing basis and will make an announcement in respect
of its facility as soon as possible.

Consequently, this Interim statement has been prepared on the going concern
basis as the Directors are of the opinion that, on the basis of the continuing
support of the Group's bank and the further cost-saving initiatives, and a
marked improvement in its operating performance, the Group will have sufficient
financial resources for the foreseeable future.

2. Loss per share

The calculation of loss per share has been based upon the loss for the period,
divided by the weighted average number of ordinary shares in issue during the
period of 174,540,806 (30 September 2002: 90,891,746).

An adjusted basic loss per share is also provided below in order to eliminate
the effects of goodwill amortisation, and the effect of the exceptional gain
made in the previous period on the disposal of fixed assets.

                                            Six months  Six months  Year ended
                                                 to 30       to 30            
                                             September   September    31 March
                                                  2003        2002            
                                                                          2003
                                             Unaudited   Unaudited            
                                                                       Audited
                                                                              
                                                 �'000       �'000       �'000
                                                                              
Loss for the period                            (5,536)     (2,068)     (9,690)
                                                                              
Adjustments:                                                                  
                                                                              
Goodwill amortisation                              477         433         946
                                                                              
Profit on disposal of fixed assets                   -     (3,592)     (3,598)
                                                                              
Adjusted loss for the period                   (5,059)     (5,227)    (12,342)
                                                                              
Weighted average number of shares (`000)       174,541      90,892      93,516
                                                                              
Loss per share                                  (3.2p)      (2.3p)     (10.4p)
                                                                              
Adjustments:                                                                  
                                                                              
Goodwill amortisation                             0.3p        0.5p        1.0p
                                                                              
Profit on disposal of fixed assets                   -      (4.0p)      (3.8p)
                                                                              
Adjusted basic loss per share for the           (2.9p)      (5.8p)     (13.2p)
period                                                                        

The exercise of outstanding share options would not dilute loss per share.

3. Placing and Open Offer

In July 2003 the Company issued 130,000,000 new ordinary shares in a Firm
Placing and 21,334,309 in an Open Offer raising �7.0m after expenses.

                                                                        �'000
                                                                             
Increase in share capital                                               1,513
                                                                             
Increase in share premium                                               6,076
                                                                             
Cash raised before expenses                                             7,589
                                                                             
Share issue expenses (offset against share premium)                     (631)
                                                                             
Cash raised after expenses                                              6,958

The Company also issued a further 7,019,843 shares during the period.

4. Reconciliation of movements in shareholders' funds

                                            Six months  Six months Year ended
                                                 to 30       to 30   31 March
                                             September   September           
                                                                             
                                                  2003        2002       2003
                                                                             
                                             Unaudited   Unaudited    Audited
                                                                             
                                                 �'000       �'000      �'000
                                                                             
Loss for the period                            (5,536)     (2,068)    (9,690)
                                                                             
Currency translation differences                    21          23         13
                                                                             
Issue of share capital                           1,583           3         97
                                                                             
Share premium (net of issue expenses)            6,988         156      3,406
                                                                             
Shares to be issued                            (2,258)       (100)      (259)
                                                                             
Net reduction to shareholders' funds               798     (1,986)    (6,433)
                                                                             
Opening shareholders' funds                      8,787      15,220     15,220
                                                                             
Closing shareholders' funds                      9,585      13,234      8,787

5. Analysis of net debt

                                    At 1 Cash flow    Non-cash  At 30 Sept.
                                   April                                   
                                                                           
                                    2003               changes         2003
                                                                           
                                   �'000     �'000       �'000        �'000
                                                                           
Cash at bank and in hand             275     (183)        (10)           82
                                                                           
Secured overdrafts               (5,478)     2,185           -      (3,293)
                                                                           
Debt:                                                                      
                                                                           
secured loans due within one           -         -           -            -
year                                                                       
                                                                           
secured loans due after one            -      (18)           -         (18)
year                                                                       
                                                                           
Finance leases:                                                            
                                                                           
due within one year                (576)       104           2        (470)
                                                                           
due after one year                  (57)         -         (2)         (59)
                                                                           
Net debt at end of period        (5,836)     2,088        (10)      (3,758)

6. Contingent liability

A subsidiary company of the Group has performed research projects for the EC
since 1996. At 30 September 2003, that company was in dispute over the
recharging of overhead costs to certain projects performed by the company
between 1996 and 2000. Overheads are allocated across all projects performed
for the EC. The Directors strongly believe that the Company has complied with
the accounting rules as laid down by the EC. The Company denies any liability
to the EC and is vigorously defending its position. The total overheads
recharged to these contracts were �1.0m and this amount has been challenged in
its entirety by the EC pending completion of its review. The Board is unable to
quantify the final amount of any liability, if any, in respect of this matter.

7. Post-balance sheet event

On 3 December 2003, the Group completed the sale of the business and assets of
its 3D sound business, Sensaura, for �3.8m (approximately �3.4m net of
expenses).

                                                                      �'000
                                                                           
Disposal proceeds                                                     3,775
                                                                           
Value of assets sold                                                (1,067)
                                                                           
Gross profit on disposal                                              2,708
                                                                           
Expenses                                                              (372)
                                                                           
Net profit on disposal                                                2,336

The turnover and operating results of this business have been shown as
discontinued operations within the Group profit and loss account.



END