Sopheon plc, the international provider of software and services that improve the financial return from innovation and product development investments, issues a trading update on the first half of 2005.

As previously announced, the Company was endeavouring to close on several transactions prior to the end of June. A number of sales were concluded following Sopheon’s Annual General Meeting, bringing the count for the first half of the year to eleven new and extension license sales among a total of twenty sales transactions. The new licenses included our first sale in Australia, through the new reseller in that territory. However, a further four licenses that were expected to close in June did not complete. Of these, three were verbally committed in June and remain in advanced contract discussions today. This includes two that are of relatively significant size.

The delay in closing the above four transactions has restricted license revenue compared to the equivalent period in 2004. Offsetting this, maintenance and services revenues have increased by 50%, reflecting greater stability in the recurring revenue base of the business. The overall effect is that revenue reported for the first half will be moderately below that reported for the same period in 2004. We expect that the pending contracts will come through in the third quarter, along with new transactions from a pipeline that continues to bring in additional prospects.

Barry Mence, Chairman, commented:
"We are, of course, disappointed that we were not able to drive all the transactions we hoped for to closure in June. However, we remain positive about the underlying direction of our business, with the strategic opportunities available to us, and with our potential for growth in a market that is building momentum."