Embargoed: not to be released until 7.00 am on 4 January 2006 Appian Technology plc ('Appian Technology' or 'the Company') Placing and Admission to AIM Appian Technology, the provider of proprietary Automatic Number Plate Recognition ('ANPR') systems and traffic guidance products and solutions, announces that trading in its ordinary shares began on the AIM market today. * The Company has developed high technology proprietary products for automatic number plate recognition, vehicle identification, traffic management, parking guidance and car park management for the surveillance, counter terrorism, access control and congestion charging markets. * Appian has a blue chip client base including police forces, local authorities and government bodies in the UK and internationally. Growth potential is significant due to rise in security and traffic initiatives. By using local partners and distributors Appian has a solid network that can maximise the exposure of its product range. * Competitor differentiation includes accuracy, cost, ease of use, adaptability and portability. Through R&D, Appian's technology is being kept at the forefront of its market. * The Company has raised £2.08 million, before expenses, from a placing by JM Finn & Co. at 5p per ordinary share, valuing the Company at the Placing Price at £5.6 million * The funds raised will be used to increase the Company's sales in the UK and internationally in markets that are expanding in response to rising security and traffic congestion issues worldwide, and to provide additional working capital. Pat Ryan, Executive Chairman of Appian Technology commented: 'The UK and international security sector is enjoying strong growth. ANPR has emerged from its new technology status and is now recognised as an essential tool in policing, intelligence and counter terrorism operations. We are ideally placed to take advantage of this growth, and as our sales figures highlight, our reputation world-wide is increasing rapidly. As an AIM-traded company we will be placed in a far stronger position to finance any future deals and raise our global profile.' For Enquiries: Appian Technology plc Pat Ryan, Executive Chairman Tel: 01628 554750 JM Finn & Co. (Broker) Sam Smith Tel: 020 7628 9688 John East & Partners Limited (Nominated Adviser) Simon Clements Tel: 020 7628 2200 St Brides Media and Finance Limited Hugo de Salis Tel: 020 7242 4477 Introduction Appian Technology is a provider of high technology proprietary products for automatic number plate recognition, vehicle identification, traffic management, parking guidance and car park management for the surveillance, counter terrorism, access control and congestion charging markets. The Company's objectives are to increase its sales in the UK and internationally, in markets that are expanding in response to rising security and traffic congestion issues worldwide. In order to achieve these objectives and continue in its development, the Directors have decided to seek admission of the Company's shares to trading on AIM and to raise £2.08 million, before expenses, by way of the Placing. Background Following a series of high profile terrorist attacks in the 1980s and early 1990s, the UK Government commissioned the development of a high performance ANPR system to help prevent future terrorist incidents. As a result, Racal Messenger Limited developed a neural network based ANPR system, Resero Technology Systems Limited developed a vehicle tagging system and Appian Technology Traffic Technologies plc developed the Navigator parking guidance information system. In 2000 these three companies merged under a new holding company, Appian Technology Plc. Products The Group currently offers hardware and software products for vehicle number plate recognition and traffic guidance applications. Number Plate Recognition Appian Technology's number plate recognition system is a data-gathering tool used in a wide variety of static and mobile applications and forms the core of the Group's business. The Company has two versions of its system, Talon and Talon SP, and sells both these recognition engines and associated products based on them. Talon was developed for large fixed sites using multiple cameras and consists of Appian Technology's recognition software installed on a dedicated hardware platform. Each Talon unit is capable of processing information from up to 28 source cameras simultaneously and multiple Talon units can be linked to use greater numbers in large installations. Talon SP is a software only version of the Talon system. Talon SP benefits from the functionality of the Talon system but without the need for dedicated recogniser hardware boards. Talon SP offers 'plug and play' capability and straight forward installation on to a typical PC platform. The development of low cost, high-powered microprocessors enabled Appian Technology to develop Talon SP from the original hardware based system. Talon SP is a more advanced version of the Company's core recognition software, which is installed from disc and can run on any PC equipped with adequate processing power. The system has certain advantages over Talon in that it is more cost effective, can be installed on a typical PC, is easier to operate and is capable of reading licence plate information at a variety of angles and under various conditions, making it ideal for mobile and smaller scale installations. Talon acts as the 'eye' or recognition engine at the front end of processes, providing highly accurate number plate information to the user who can then use that information for measuring purposes or can match outputs against an exception or inclusion database. When the Talon system is triggered by a number plate entering its field of view, a series of algorithms are run to identify the position of the plate in the image, extract the relevant area, apply geometric distortion compensation if necessary and then isolate the individual characters to be read. The system then matches each character to its database, applying a confidence scoring system which is unique to Talon. The use of a neural network based system typically results in a very high level of accuracy. Most ANPR systems are based on template matching which cannot under field conditions achieve the accuracy of neural network based systems. Neural network based systems achieve higher rates of recognition because the system is based on recognising the characteristics of each symbol read rather than attempting to match a character to a preloaded template. Talon and Talon SP are highly flexible products which can be relatively easily adapted to a wide range of number plate styles including Arabic characters, square licence plates and different colours. The neural network technology employed means that Talon is capable of accurately reading data over a considerable range of character styles, in effect 'learning' with usage. The Company is currently planning to add Chinese characters to the system. Information read by the Talon system can be transmitted via fixed connection, landline or GSM network in real time to external processors for comparison against a database and the report time for a vehicle to be identified and flagged if on a specific inclusion or exclusion list is typically less than one second. The Directors believe that the Company's products are superior to those of its competitors for the following reasons: * Accuracy: the Talon system frequently wins contracts with accuracy requirements of up to 97 per cent. Rival systems, which rely on template matching, typically score lower levels of recognition. * Cost: Talon SP allows access to a much wider range of customers who would not previously have been able to justify the costs of a full hardware and software system. * Ease of use: Talon SP is designed as a 'plug-and-play' application and can rapidly be configured on a typical laptop or desktop computer to operate up to 4 cameras. Once installed the data generated is easily exportable in a variety of data formats. * Portability: Whilst the original Talon system was designed for fixed camera installations, Talon SP uniquely works in a mobile environment or on a normal laptop computer, offering a wide range of surveillance enforcement or revenue applications. Other products developed, in response to customer demand, from Talon and Talon SP include: * Talon Shadow Roadside: a roadside ANPR processor unit designed to withstand extreme environmental conditions and execute real time roadside processing of number plates. The system comprises a shoe box sized fanless computer running Talon SP ANPR software on a windows operating system. * Talon Shadow Mobile: a mobile platform ANPR recognition system designed to be permanently installed and operated in vehicles. Using Talon SP software, the platform is capable of simultaneously processing number plates from four ANPR cameras covering four lanes of high speed, high density traffic. * Talon Sentinel: a PC based with full wireless GSM,GPRS and 3G communication capability, connected to a dual infra-red and overview ANPR camera. Powered by batteries or mains power, the system is able to hibernate during periods of inactivity. * Talon Transportable: an ANPR recognition system designed to operate in vehicles or in static locations. The platform has a number of features and components giving users a complete, fully integrated 'one box' ANPR solution that can be moved easily between locations and vehicles. Applications for the Talon and Talon SP systems and derivative Talon products include: Surveillance, crime-reduction and anti-terrorism The system provides intelligence for the surveillance needs of the police and security services. The system can be used to identify passing vehicles and match them against a target list, which can either be held in the system's integral database or within a central computer providing an instant warning when the vehicle concerned passes by. This has significant benefits for targeting police resources, improving police efficiency and assisting implementation of relevant government policies. Site security The system provides effective monitoring of entry and exit points, controlling access, maintaining an inventory of all vehicles and raising an alarm on detection of an unauthorised entrance or exit. Examples include monitoring the departure and return of hire cars or allowing car park access to members of staff and authorised users. Traffic monitoring By efficiently collecting large volumes of data identifying individual vehicles, the system can provide valuable statistical analysis such as traffic volumes on highways and parking behaviour in relevant locations. Traffic regulation The system can capture high-quality, tamper-proof evidential images of vehicles breaking traffic regulations, storing them locally or transmitting them to a central processing site. Parking Guidance Information Systems The Company produces the Navigator range of parking guidance information systems. Each system comprises vehicle detection processors, variable message signs, control processors and a management software suite. The processors count vehicle movements at the entrances and exits, allowing occupancy information to be displayed in variable message signs, guiding motorists to vacant spaces, reducing congestion and increasing revenue potential. Appian Technology's system differs from rivals in that its detection processors use a series of infra-red beams to count traffic, rather than a magnetic loop, thus making them cheaper to install, as the entrances and exits to be monitored do not need to be disturbed, and more accurate as two vehicles close to each other will not be counted as one as is sometimes the case with other systems. LaserCam Appian Technology is the sole distributor in the UK Market for the LaserCam range of speed enforcement cameras manufactured by Redflex Traffic Systems Pty Limited. The LaserCam system is a portable speed enforcement camera which typically comprises a dual camera unit and a portable field computer. The dual camera unit takes two simultaneous pictures of infringing vehicles: a wide angle picture of the vehicle and the surrounding environment and a close up image of the vehicle including the number plate and drivers' face, if required, making it ideal for use on multi-lane highways and in dense traffic. The digital version of the LaserCam system can even work in complete darkness using a white light flash which is triggered by the laser detection system. Images taken are stored on a WORM (Write Once Read Many) disk with a time and date stamp and security signature to prevent tampering. The use of digital photography allows near instantaneous access, significantly eases storage and reduces the likelihood of mechanical defects preventing effective enforcement. Intellectual Property Rights The Group is reliant upon certain of its registrable intellectual property rights which are material to its business. The Board has sought to ensure that registerable intellectual property rights are protected, so far as is possible, by lodging patent and other applications. The Group seeks advice from specialist intellectual property advisers and lawyers in respect of its intellectual property policies, and while the Board continually seeks to improve the protection available to the Group by registration, the fact that key software remains unpublished is considered by the Directors to be a significant barrier to competitors entering into the Group's market place, as well as protection of the Group's core technology. The Market Worldwide security, traffic monitoring and control pressures are growing, particularly following the events of September 11 2001 in the United States, the Madrid bombings and more recently the London bombings on 7 July 2005. As a result, police forces, local authorities and government bodies in the UK and internationally are increasingly looking for automated number plate recognition and traffic guidance solutions as an intelligence gathering tool and to improve the effectiveness of policing. Talon, because of its accuracy provides an ANPR solution for critical and other security applications. The ANPR market is growing strongly in the UK. ANPR systems are frequently used by specialist police teams in security operations, increasingly being installed in urban CCTV systems and surveillance systems and fitted to police vehicles to meet a range of policing needs. The police vehicle fit market is growing as police forces seek to broaden the application of ANPR systems in police cars away from traffic policing and into wider crime detection and prevention strategies. Historically, traffic policing applications did not require high levels of detection accuracy. However, the market is now converging as security concerns increase the need for a higher level of accuracy in ANPR systems. Consequently, Appian Technology is now selling systems into this growing vehicle fit market using a suite of products developed in 2004 based on Talon SP software. In addition, ANPR systems can now be used in a range of applications including more general policing, access control, traffic monitoring and congestion charging. ANPR technology applications are particularly effective as an enforcement technology where car based recognition technologies are required. The Talon suite of products are suitable for activities that are reliant on high levels of accuracy. The UK is a world leader in the application of CCTV and ANPR systems and a number of countries are now looking to deploy similar systems to those used in the UK. In the last 18 months, the Company has successfully tendered for numerous contracts, some of which contain confidentiality clauses and cannot be disclosed. Contracts the Company has been able to announce include: * an order from British Transport Police (September 2005) for the portable sentinel system for use in station car parks and security points; * initial order from Mexico (July 2005) for Talon ANPR system for 11 police vehicles; * an order from Prudential (February 2005) to supply Talon ANPR to Cribbs Causeway shopping centre for the purposes of security, 'Journey Time Analysis', marketing and management of parking resources; * initial sales to the Sacramento Police Department (November 2004), Los Angeles Police Department (November 2004) and police in Alabama (July 2004) of mobile ANPR systems; * installing a parking guidance information system at Edinburgh airport (October 2004); * orders of a fixed site Talon system by a number of UK towns and a major UK west country city; * sales to a large public sector security organisation and defence establishments; and * upgrading an existing closed circuit television network in Avon and Somerset to incorporate the Talon system. The Directors believe that the United States is an enormous potential market for Appian Technology, with thousands of police departments and law enforcement agencies as potential customers. Appian Technology is currently in trials with a number of forces and early results from those trials are positive. Competition The Directors believe that the Company's main direct competition comes from three ANPR companies, PIPS Technology Limited, CitySync Limited and Computer Recognition Systems Limited all of which are UK based. The Directors believe that Appian Technology's core Talon ANPR product is differentiated from competing ANPR products through its superior recognition performance. In counter terrorist `mission critical' applications or revenue applications, high ANPR performance is typically the key factor involved in selecting an ANPR provider. Appian Technology's high ANPR performance is achieved through the use of neural network technology rather than template matching technology which tends to be used in competing solutions. In addition, having occupied the ANPR market for some considerable time Appian Technology has a detailed understanding of associated camera and processor technologies enabling them to offer their customers `turnkey' ANPR systems. Appian Technology seeks to maintain its market leading technological performance through considerable investment in research and development and subsequent releases of its Talon ANPR software. Talon version 6.2 will be released shortly and the Directors expect this version to offer greater accuracy performance, thus maintaining the Director's positioning of Appian Technology as a `best of breed' ANPR company. Financial Information Appian Technology's size and relatively small balance sheet currently limits the potential business opportunities available, particularly those of longer duration, even when it is bidding as part of a consortium as the majority of clients are governmental or quasi-governmental and have certain minimum balance sheet requirements for suppliers and contracts. Earnings derived from contracts won by Appian Technology are paid unevenly throughout the duration of the contract. The financial results for 2003 in particular were distorted by a large contract with the UK police to provide mobile ANPR systems known as Project Spectrum. Year ended 30 September 2003 2004 2005 £'000 £'000 £'000 Turnover 2,689 2,374 2,902 Gross Profit 1,298 1,315 1,425 Operating Loss (1,221) (883) (999) Loss before Taxation (1,206) (782) (941) Net Assets/(Liabilities) 22 98 (495) After adjusting for the Spectrum programme referred to above, the company's unaudited pro forma financial performance over the same period would be: Year ended 30 September 2003 2004 2005 £'000 £'000 £'000 Turnover 2,689 2,374 2,902 Spectrum (555) - - Turnover excl. Spectrum 2,134 2,374 2,902 Gross Profit 1,111 1,315 1,425 Excluding Spectrum, the Company reported growth in its core sales of 36 per cent. between 2003 and 2005 and a rise in gross profits of 28.3 per cent. over the same period. Current Trading and Prospects In the year ended 30 September 2005 Appian Technology made significant progress in developing its business. The Company invested heavily in sales and marketing in order to establish the business and build critical mass and brand recognition. As a result, the Company incurred higher than anticipated costs which, coupled with additional research and development spend and lower gross margins in the second half on a few specific projects, resulted in a greater loss before taxation than that reported in 2004. Sales and marketing costs increased substantially during the year, as the Company recruited additional staff. This was partially offset by savings in management and administration costs. Management was strengthened with the recruitment of Tom Keene as sales manager, who has since joined the Board and is now Commercial Director. Following his appointment, the sales force was reorganised, which coincided with an increase in public and private sector security spending following the recent terrorist activity in London and throughout the world. A number of appointments were made to enhance the Company's international sales force to take advantage of the increase in security spending. The increase in turnover and forward pipeline are a direct result of the improvement in the market and the ability of the restructured sales team to convert leads. Research and development expenditure increased due to a number of one off development projects. A new range of cameras was developed, new products and applications were devised for specific customers and Appian Technology participated with IBM in the congestion charge trial in Edinburgh, which also involved development expenditure. This increased expenditure has enhanced the range of applications of the Company's core ANPR product and provided additional products for sale in the future. A lower gross margin was recorded on sales to a number of new strategic customers during the second half of the year. This resulted from the extra cost associated with devising and implementing new applications of the product range. A review of the gross margin relating to business carried forward from last year and pipeline orders indicates that margins have increased compared with those experienced in the year to 30 September 2005. The Company's current order book of £1,356,000 comprises £384,000 of orders relating to the year ended 30 September 2005 carried forward, £500,000 in respect of maintenance contracts and £472,000 of orders received since the start of this financial year. The Company's client base has increased significantly including police forces, local authorities and government bodies both in the UK and internationally, who are increasing spending as the global security environment necessitates. The Company is looking forward to a further increase in sales in the year to September 2006. Margins are improving and the Company is actively examining opportunities to reduce costs in the current year. The Directors are confident that, following Admission, the Company will be well positioned to take advantage of the significant opportunities available to it. Directors and Management Directors Pat Ryan FCA, 54, Executive Chairman Pat Ryan is Executive Chairman and is also the Chairman of National Avionics Limited, a significant shareholder in Appian Technology. He has private venture capital interests with an emphasis on developing businesses and has business experience in developing technology businesses and investment banking. David Hearn ACA, 42, Finance Director David Hearn joined Appian Technology in November 2001 from a position as Group Chief Financial Officer and Operations Director of LinkGuard Limited. A qualified accountant, David has held various positions in fast growing companies including positions as finance director of Modular Technology Plc and Photobition Group PLC. Tom Keene, 34, Commercial Director Tom Keene joined the Company in June 2004. He is an experienced sales manager within the technology industry, having gained extensive international experience through business development and channel management. Tom has held senior positions with Seaeye Marine and Consultronics Limited, as well as having been a Commissioned Officer in the British Army. Fred Newton QPM, 54, Non-executive Director Fred Newton, a former Assistant Chief Constable, was appointed to Appian Technology's Board in September 2002 following his retirement from the police service after 33 years' service. As National Co-ordinator of Ports Policing for the UK he was involved with counter-terrorism at ports involving the application of ANPR technology, and, in particular the development of network integration of both fixed sites and mobile systems. He was awarded the Queen's Police Medal for services to ports policing in the 2000 New Year's Honours List and was at one time the Senior Investigating Officer of the Lockerbie Air Disaster. John Finan, 67, Non-executive Director John Finan completed a decade as Chairman and Chief Executive of Winterthur Life UK, the UK life and pensions arm of the Credit Suisse Group. He was also Chief Executive and Deputy Chairman of NEL Britannia and Director of Pearl and and General Manager, UK Home Service, for Pearl Assurance. He is sole proprietor of Finan Consulting and his current portfolio includes companies in varied industry sectors who call on his experience in mentoring, strategic planning, turnaround management, deal making and fundraising. He also works closely with the Irish Government through Enterprise Ireland, mentoring young Irish companies either as a board director or as a consultant in addition to running business workshops. Employees The Group currently has 31 employees (2003 - 24; 2004 - 29), 30 of whom are located in Bourne End and one in the USA (of whom 9 are involved in sales, 4 are involved in administration and 18 in operations, including maintenance and research and development). Reasons for and details of the Placing and use of the Proceeds Under the terms of a Placing Agreement JM Finn & Co. has agreed, as agent for the Company, to use all reasonable endeavours to procure placees for the Placing Shares at the Placing Price to raise £2.1 million (gross) and approximately £1.73 million (net of expenses) for the benefit of the Company. The Placing is conditional, inter alia, upon Admission and the Placing Agreement becoming unconditional and not being terminated in accordance with its terms. The Placing Shares, when issued and fully paid, will rank equally in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of this document. The Placing Shares will be allotted and issued prior to Admission credited as fully paid subject only to Admission. Such allotment and issue will become wholly unconditional on Admission, which is expected to occur on 4 January 2006. The Group intends to apply these funds to provide working capital for the Group and, pending their use, will be placed on deposit. Dealing Restrictions At Admission, the Directors and connected parties will own an aggregate of 13,324,428 Ordinary Shares, representing 11.96 per cent. of the enlarged issued share capital of the Company. All of the Directors and National Avionics Limited have undertaken with the Company, John East & Partners Limited and JM Finn & Co. not to dispose of any Ordinary Shares for a period of one year following Admission and, for a further year, not to sell any Ordinary Shares without the consent of John East & Partners and JM Finn & Co., such consent not to be unreasonably withheld or delayed. Any shares must be sold through JM Finn & Co. (provided that JM Finn & Co. is at the time broker to the Company). In addition, St Helens Capital Limited has undertaken with the Company, John East & Partners Limited and JM Finn & Co., subject to the exercise of the warrant held by it, not to sell any Ordinary Shares, without the consent of John East & Partners Limited and JM Finn & Co., such consent not to be unreasonably withheld or delayed, arising from the exercise of the warrant. Share Option Scheme The Company has issued options over 4,540,000 Ordinary Shares with exercise prices ranging from 7.25p to 22.5p per share. Conditional on Admission, options over 390,000 Ordinary Shares, of which 200,000 are held by David Hearn, with exercise prices ranging from 15p to 22p per share will lapse and replacement options over the same number of shares will be issued, exercisable at the Placing Price. The Company proposes to issue further options over 600,000 Ordinary Shares to certain key employees and options over 2,500,000 Ordinary Shares exercisable at the Placing Price. Consequently, following Admission the Company will have issued or resolved to issue options over 7,490,000 Ordinary Shares, representing 6.72 per cent. of the enlarged issued share capital. The Directors have resolved that options in issue will not exceed 7.5 per cent. of the issued share capital of the Group from time to time. Warrants The Company has issued warrants to subscribe for 11,767,316 Ordinary Shares with exercise prices ranging from 5p to 28p per share. Conditional on Admission, warrants over 200,000 and 400,000 Ordinary Shares, held by Directors, exercisable at 15.5p and 22p per share, respectively, will lapse. The Company proposes to issue 600,000 replacement warrants exercisable at the Placing Price on or before 4 January 2011. In addition, the Company proposes to issue 400,000 warrants to providers of services, exercisable at the Placing Price on or before 3 January 2011. Consequently, following Admission the Company will have issued warrants to subscribe for 12,167,316 Ordinary Shares, representing 10.92 per cent. of the enlarged issued share capital.