Sopheon, the international provider of software and services that improve the financial return from innovation and product development investments issues a trading update.

In addition to delivering on contracts closed during the first half of the year, we have continued to add further new business. Since the end of June, we have closed 5 new license orders, and 4 license extensions from existing customers, in addition to a number of proof-of-concept and other consultancy assignments. As in the past, these transactions have shown considerable variation in size and we continue to note that performance in any reporting period can be materially affected by individual deals. Nevertheless, the pipeline for closing additional business during the traditionally busy final months of the year has never been more active; further new sales in this period will add to contracted and recurring revenue visibility for 2006, which is already in excess of £5m.

Importantly, one of the recently closed new license orders - which resulted from collaboration with a leading global IT service consultancy - involves providing a product portfolio management system to a major automobile company. Phase one of this project will contribute substantially towards 2006. Successful completion of this initial phase has the potential to materially contribute to 2007 and beyond, and together with our signing of Electrolux earlier this year, will provide a platform for Sopheon’s strategy to address new and exciting vertical markets within the discrete manufacturing industry.

Also of strategic significance but individually at the other end of the financial scale is our ongoing evaluation of a subscription based sales model for our software, as noted in our recent interim statement. This program is aimed at extending our appeal to mid-market companies, and we are pleased to report our first sale using this model.

Today, in a separate release, we have also announced further developments in our alliance with Microsoft, describing the planned integration between Accolade and Office Project 2007. This integration will increase Accolade’s capacity to bring business users and professional project managers together to increase the success rate, throughput and value of innovation efforts. Sopheon is an active member of Microsoft’s product advisory council for Office Project, as well as being a Gold Certified partner and a Managed partner.

The high level of activity in our pipeline and the continued growth of our customer base, taken together with rising interest from business analysts, trade press and other software vendors, indicate increasing maturity of a market in which we have a leading position. This gives us confidence in the outcome of 2006 and beyond.