Sopheon plc (“Sopheon”), the international provider of software and services that improve the financial return from innovation and product development investments, announces its results for the year ended 31 December 2005 together with an outlook for the current year. Sopheon shares are traded on AIM in London and on the Euronext Amsterdam. These results and the 2004 comparatives are reported under International Financial Reporting Standards (IFRS). Areas materially affected by this change from the group’s former UK GAAP policies are the requirement to expense share option grants, and to capitalise and amortize certain software development costs.
Highlights:

· Revenue for the year was £4.7m (2004: £4.3m) and the EBITDA loss for the year was £0.7m (2004: £1.2m).

· Sixteen new customers were added in the year, with 13 extension orders from existing customers. By year end there were 70 companies throughout the world that had licensed our software, and the total number of individual users from within those organizations surpassed 20,000.

· Version 6.0 of our market leading Accolade suite was released, equipping our solution with further extensive integration to Microsoft Office and Microsoft Project Server applications. Accolade now supports ten languages including Japanese and Korean.

· The recurring contract base on entry to 2006 represented £1.4m of revenue. Revenue visibility for the first half of 2006 stands at £2.2m which is already ahead of the £1.9m reported for the first half of 2005. Visibility includes a substantial imminent order, resulting from a successful pilot that has converted to an enterprise-wide deployment, for which all required internal investment approvals have now been secured.

· In addition to raising £1m of new equity, Sopheon completed the full conversion of its convertible loan note, and renewed the group’s €10m equity line facility with GEM Global Yield Fund through December 2007.

Sopheon’s Chairman, Barry Mence said: “Two thousand and five was another growth year for Sopheon. But we were dissatisfied with key aspects of our performance and, in particular, with our failure to achieve profitability. We have implemented changes in a range of areas. These actions build on the business and product strengths that have underpinned our growth, and are aimed at driving faster expansion of revenues and improved margins. The benefits of these changes are already in evidence, and we shall maintain our efforts to create more value for our shareholders”