In accordance with the requirements of Euronext Amsterdam, Sopheon plc ("Sopheon") issues its trading update for the third quarter of 2005. The third quarter is traditionally quiet in the software industry, but the value of Sopheon’s new sales orders taken during the quarter significantly exceeded the equivalent period in 2004, and was broadly equal to the total new sales achieved in the first six months of 2005. During the third quarter, including extensions, Sopheon signed eight license sales and four proof of concept engagements, in addition to several incremental consulting assignments from existing clients.

In our results statement for the six months to 30 June 2005, we identified seven license opportunities as larger and more complex than the historic average. Of these, two have now concluded in a license order (included in the total count of eight for the quarter) and four are engaged in proof of concept activities. One of these has already contracted for its license, subject to an acceptance decision in the fourth quarter. The seventh opportunity remains in contract negotiations; this is also one of three opportunities carried forward from the second quarter, of which the other two have concluded in a license order.

The volume of service revenues continues to show momentum in conjunction with license sales and proof of concept activity. As indicated in our interim statement, we have continued to develop our partnerships to expand our implementation capacity and to act as a source of introductions to potential new customers. During the period we formed relationships with three leading consultancies in product development, each with an international footprint. Further details will be announced in due course. In addition, to support both current needs and anticipated growth, we have recruited a senior IT executive to lead service delivery in Europe. Amit Eitan has 26 years experience in leading international IT organizations, and will be based in our offices in Maastricht.

Initial findings from our research into the application of our European Accolade-based healthcare solution into the US market have been positive. We are now considering how best to achieve progress in this area without disrupting activities in our core vertical markets.

The recent sales have led to good revenue growth over the first and second quarters of 2005, however a proportion of the revenues deriving from these new sales will not be booked until next year. Nevertheless, Sopheon has demonstrated renewed commercial progress in the third quarter, and at the date of this report, visibility of 2005 revenues stands at £4.1 million, which is 95% of the revenues recorded in 2004. Visibility includes new orders, recurring maintenance streams, and contracted license revenues conditional on acceptance decisions. It does not include potential license sales to other customers under proof of concept, which along with several other new license opportunities, are being closely pursued for closure before year end. Our reported performance remains sensitive to the timing, value and profile of individual sales events. However the fourth quarter is typically a busy one for software businesses and this was certainly true for Sopheon in 2004. Our sales teams are focused on active pipelines with substantial sales potential, and are working hard to close out the final months of 2005 with strong momentum.

Sopheon’s Chairman, Barry Mence said:
"Sopheon’s third quarter sales performance has been higher than the seasonal norm and this return to growth, together with our pipeline of potential business for the final quarter of 2005, gives us confidence that we will have a strong finish to the current year."