Final Results

Embargoed Release: 07:00hrs Thursday 26th March 2009

                                  SOPHEON PLC                                  

                   ("Sopheon", the "Group" or the "Company")                   

         PRELIMINARY AUDITED RESULTS FOR THE YEAR TO 31 DECEMBER 2008          

Sopheon plc, 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 2008 together with an
outlook for the current year. Sopheon shares are traded on AIM in London and on
Euronext Amsterdam.

Highlights:

  * Revenue for the year was £9.3m (2007: £6.3m). All territories grew strongly
    and the Vision Strategist solution acquired with Alignent contributed 13%
    of revenues. Full year revenue visibility for 2009 already stands at £5.4m.
   
  * The EBITDA result for the year was a profit of £1.1m (2007: £113,000). The
    Group generated a maiden profit before tax of £44,000 (2007: loss of £
    443,000).
   
  * We closed 53 new license orders and extensions during the year, and grew
    our customer base to 157 licensees for our core software platforms. Our
    recurring revenue base coming into 2009 was £3.7 million compared to £2.6
    million at the start of 2008. Existing customers contributed over 60% of
    revenue for the second year in a row.
   
  * The combination of Accolade and Vision Strategist is the first in the
    industry to integrate and synchronise product planning and product
    development execution. Four product releases were completed during the
    year, two for each product. Sopheon can now bring immediate value to
    recession-plagued companies that need to reduce costs, without undercutting
    their prospects for long-term growth.
   
Barry Mence, Chairman, commented: "We are very proud to deliver such material
progress in 2008. Our solutions are ideally placed to support major companies
in their efforts to maintain strategic investment in innovation, while
containing costs during these turbulent times. However, that same market
turbulence makes it hard to predict our own business development in 2009 and we
will adopt a cautious stance with respect to our own cost base."

For further information contact:

Sopheon plc

Barry Mence, Chairman
Arif Karimjee, CFO
+ 44 (0) 1483 685 735

Hansard Communications
Vikki Krause
+ 44 (0) 207 245 1100
[phone]

Seymour Pierce
Paul Davies
+ 44 (0) 207 107 8000

Citigate First Financial
Claire Verhagen
+ 31 (0) 205 754 010

About Sopheon

Sopheon (LSE: SPE) is an international provider of software and services that
help organisations improve the business impact of product innovation. Sopheon's
solutions automate and govern the innovation process, enabling companies to
increase revenue and profits from new products. Sopheon is listed on the AIM
Market of the London Stock Exchange and on the Euronext in the Netherlands. For
more information, please visit www.sopheon.com.

Accolade®and Vision Strategisttmare trademarksof Sopheon.
Stage-Gate® is a trademark of the Product Development Institute.
Revenue visibility is defined in Note 4.


CHAIRMAN'S STATEMENT

Introduction

Sopheon delivered a landmark performance in 2008. We are delighted to report
revenues that grew from £6.3m to £9.3m, an EBITDA of £1.1m (2007: £0.1m) and a
profit before taxation of £44,000, leading to a profit after taxation of £
29,000 (2007: loss of £443,000).

License sales were spread across a total of 53 new and extension orders
compared to 47 transactions the year before. We entered 2008 with a licensee
base of 135 companies, and grew this to 157 by the end of the year. Performance
was geographically balanced, with both the US and Europe showing revenue growth
in excess of 40%. Our reseller partners accounted for 11% of the total, up from
6% in the previous year. Vision Strategist, the solution that we acquired with
Alignent in June 2007, contributed 13% of revenues in 2008. The remainder was
Accolade related.

These developments underline the growing maturity of our business. However,
particularly in these uncertain economic times, our reported performance does
remain sensitive to the timing, value and profile of individual sales events.

At the date of this report, full-year 2009 revenue visibility incorporating
booked revenue, contracted services business and the run rate of recurring
contracts already stands at £5.4m. Revenue visibility is more fully defined in
the notes.

Our acquisition of Alignent in 2007 has been fully integrated and is
contributing both strategically and operationally to the progress of our
business. Revenues for Alignent's Vision Strategist grew 28% compared to the
solution's annualised contribution in 2007. Our expectation that the software
would improve our ability to break into the aerospace and defence sectors has
been validated. Throughout 2008, we invested substantial time and energy in
these markets, learning their dynamics and requirements while developing the
relationships needed to generate business. As a result of these efforts, we
entered 2009 with an active pipeline of significant sales opportunities in
these sectors.

Trading Performance

Sopheon's consolidated turnover grew to £9.3m (2007: £6.3m). From a
geographical standpoint, revenues for the US business increased by
approximately 50%, with 42% growth in Europe. This performance was boosted to a
degree by a weakening of the annual average exchange rate between Dollar and
Sterling from 1.9969 in 2007 to 1.8521 in 2008. Nevertheless, in dollar terms,
total revenues were $17.2m compared to $12.7m in 2007, representing growth of
35%, a very creditable performance given the economic conditions. The
annualised average growth of the business since the launch of Accolade eight
years ago is approximately 36%.

The 53 transactions completed in 2008 included 15 relating to the Vision
Strategist solution, acquired with the Alignent business in June 2007. Overall,
the former Alignent business contributed approximately 13% of total revenues
during 2008. Although both our core regions demonstrated strong growth in
revenues for 2008, the US business accounted for 63% and 64% of our total
revenues in 2007 and 2008 respectively, and we believe this emphasis will
continue.

Business mix

Overall, in 2008 our business delivered a 44:28:27 ratio of license,
maintenance, service respectively compared to 34:29:37 in the prior year. In
our last report we had predicted that the proportion of license revenues would
rise in 2008, assisted in part by the effect of the transactions that were
deferred from the end of 2007, and indeed license revenue almost doubled in
Sterling terms.

Consulting revenues grew by almost 40% and we expect this to continue to expand
steadily, providing a source of stability and maturity to our business even
though it may become a smaller overall proportion as license revenues become
more prevalent. Services business from existing customers had grown sharply to
£1.2m in 2007, and we were pleased to maintain this performance with £1.3m of
such business recorded during 2008. Whilst we are very proud of the
achievements of our services staff, we believe that in time services will
moderate as a proportion of our total revenues by the effect of license
business coming through partners, for which associated services work is
unlikely to be performed by Sopheon.

Overall revenues from existing customers remained above 60% of total revenues
for the second year in a row. We believe this underlines both the value of our
solutions and the increasing stability of the business. Recurring income has
grown to £3.7m coming into 2009, compared to £2.6m a year before. The majority
of this income is represented by maintenance services, but also includes
hosting services and license rentals.

Overall gross margins have held fairly steady at 75% (2007: 73%) but this
continues a trend of improvement, with 2006 at 72%. One factor that affects
margin is the degree to which our services group recruits permanent staff as
opposed to using subcontractors. We have gradually built up our internal
resources over the last two years, carefully matching growth in resources to
growth in revenue but successfully reducing reliance on subcontractors. This
has increased the strength of the services team from 18 to 30 over the two year
period, of which five joined in 2008. In future, margins may also be slightly
affected by decisions to embed, rather than build, certain third party
components or methods of working into our software.

Research & Development expenditure

The R&D effort in 2008 continued the theme of advancing the capabilities in
parallel of both of our key product offerings, namely Accolade and Vision
Strategist. As a consequence we delivered four releases during the year, two
for each product. This effort included the release in the first quarter of the
most significant new version of Accolade in Sopheon's history - version 7.0 -
which has extended our value not only to the process manufacturing markets that
we have historically targeted, but also to the large aerospace, defense and
automobile sectors.

Headline R&D expenditure almost doubled, but half of this can be attributed to
an increase of £0.5m in amortisation and impairment charges. Of this, £0.2m
represents higher amortisation costs for the Group's internally generated R&D
assets, largely relating to the Accolade 7.0 release. A further £0.1m is due to
the full year effect of amortising the R&D assets acquired with Alignent in
June 2007. The final £0.2m represents impairment charges taken against the
Alignent R&D asset. As further detailed in the notes, the decision by certain
customers to terminate or convert their legacy installations of Vision
Strategist affected the recurring revenue base which formed part of the
valuation of the intangible assets acquired with Alignent. The Board does not
believe that these events have any bearing on the commercial and strategic
justification for the Alignent acquisition.

Accordingly, ignoring the effect of the capitalisation and amortisation of such
costs, total R&D expenditure increased by almost £0.5m compared to 2007. Since
2001 Sopheon has maintained R&D spend at above 20% of revenues. Sopheon is
committed to product leadership and R&D excellence is a core competency of the
Group. Building on recruitment that took place across 2007, we increased R&D
staff from 29 to 33 during 2008. Much of the additional resource was devoted to
the research and requirements work associated with the early phases of several
planned new releases, in addition to sustaining work to keep existing releases
in step with platform changes. As a result of the above, the amount of 2008 R&D
expenditure that met the criteria of IAS38 for capitalisation remained flat at
£0.8m (2007: £0.8m).

Operating costs

Overall staff costs have increased by approximately £1.6m. Three principal
factors have contributed to the increase. Approximately £0.6m can be attributed
to the fall in the exchange rate for Sterling against the US dollar and the
Euro, the currencies in which the majority of the Group's employment costs are
denominated. A further £0.2m is due to a higher level of bonus being earned by
the Group's employees as a result of the improvement in financial results over
2007. The remaining amount can be attributed to the impact of our increased
staffing levels. During 2007, headcount rose from 65 to 92, leading to an
average of 85 for the year; these staff members joined throughout the year, so
the full year cost effect of the expansion did not arrive until 2008. During
2008, we expanded resources to a total of 105 by the end of the year, for an
average of 98 during the year. These expansions occurred in the three key
operational areas, namely research and development, distribution (sales and
marketing), and customer services.

Detailed comments regarding customer services and research and development
costs are noted above.

Headline distribution costs were £1m higher than the previous year. This
included £0.1m for the full year effect of amortising the intangible customer
assets acquired with Alignent in June 2007, and £0.2m of impairment charges
taken in the year against that same asset for the reasons given in the
discussion of R&D costs above. Of the remaining £0.7m, over £0.2m of the
increase is due to higher bonus and commission payments linked to the higher
performance achieved. The remaining increase is due to higher investment in
sales and marketing resources in line with revenue growth, in addition to
currency exchange factors.

Headline administration costs have fallen by £0.2m. This fall can largely be
attributed to exchange gains recorded on the foreign currency cash balances
held in Sopheon plc. Underlying administration costs have remained broadly flat
year on year; administration staff and related costs have not been expanded
during the period, and provisions recorded against investments and loans to the
Group's reseller partners has remained in line with prior year levels. We
continue to operate a conservative policy with regard to the recoverability of
such investments.

Results

The combined effect of the revenue and cost performance discussed above had a
dramatic effect on Sopheon's EBITDA performance for 2008 which rose to £1.1m
(2007: £0.1m).

In common with other businesses in our sector, Sopheon measures its annual
performance using EBITDA (Earnings before Interest, Tax, Depreciation and
Amortisation) which the Board believes provides a useful indicator of the
operating performance of our business by removing the effect on earnings of
tax, capital spend and financing. EBITDA is further defined and reconciled to
the operating profit in the notes. Our calculation of EBITDA is stated after
charging (i) share based payments of £0.1m (2007: £0.1m); (ii) impairment
charges of acquired intangible assets of £0.3m (2007: £nil); and (iii) exchange
gains of £0.2m (2007: £49,000) but excludes depreciation and amortisation
charges for the year of £0.9m (2007: £0.5m) and net finance costs of £0.2m
(2007: £0.1m).

Including the effect of interest, depreciation and amortisation, the Group
reported a profit before tax for the year of £44,000 (2007: loss £0.4m).
Although the Group has substantial accumulated tax losses in all territories,
certain tax jurisdictions do not permit a complete offset of profits against
such losses resulting in a small US "Alternative Minimum Tax" charge that
reduces the retained profit after tax to £29,000. The profit per ordinary share
was 0.02p (2007: loss of 0.32p).

Financing and balance sheet

Net assets at the end of the year stood at £4.3m (2007: £3.3m). Gross cash
resources at 31 December 2008 amounted to £2.6m (2007: £2.1m). Approximately £
1.1m was held in US dollars, £0.6m in Euros and £0.9m in Sterling.

Intangible assets stood at £4.7m (2007: £3.7m) at the end of the year. This
includes (i) £2.4m being the net book value of capitalised research and
development arising (2007: £1.4m) and (ii) an additional £2.3m (2007: £2.3m)
being the net book value of Alignent intangible assets acquired in 2007. The
underlying assets are denominated in US dollars. Due to amortisation and
impairment charges, the underlying dollar value of these assets lowered during
the year, however, the value in Sterling has risen due to the movement in
exchange rates.

As part of the funding raised for the Alignent acquisition, Sopheon secured
$3.5m of medium-term debt from BlueCrest Capital Finance LLC ("BlueCrest"). The
debt is being repaid in 48 equal monthly instalments, and is secured by a
debenture and guarantee from Sopheon plc. Since inception, approximately $1.1m
of the medium-term debt principal has been repaid. The Group also has an
additional $750,000 revolving credit facility from BlueCrest, secured on
accounts receivable.

Sopheon's equity line of credit facility with GEM Global Yield Fund Limited
("GEM") remains in place through 23 December 2009. The Directors have not yet
concluded whether to seek extension of the instrument. In 2007, GEM agreed to
implement a two year extension at no cost to Sopheon. The facility has been
used to raise working capital once, in March 2004, leaving approximately 90% of
the original €10m facility available under the extended agreement. Drawings
under the GEM equity line of credit are subject to conditions relating inter
alia to trading volumes in Sopheon shares.

Short-term borrowings connected with the Group's revolving facilities amounted
to £0.5m (2007: £0.4m). In both years, this represents $750,000 with the
Sterling increase linked to exchange rate movements. Similarly, the overall
medium-term loan balance has increased from £1.6m to £1.7m, but this apparent
increase disguises payments of $1.1m which actually reduced the dollar carrying
value of the debt by $0.8m. These repayments have been funded out of free cash
flow.

Markets & Products

Sopheon's solutions belong to a major class of software applications that
concentrate on supporting product lifecycle management ("PLM"). The purpose of
this applications Group is to help companies develop and execute their product
strategies.

The PLM market is made of multiple submarkets. Some of these submarkets, such
as product data management ("PDM"), are mature. Others are new and emerging.
Sopheon is focused on an emerging submarket called Product Portfolio Management
("PPM"). Software solutions in most areas of PLM concentrate on the engineering
or technical challenges involved in managing a product while it is under
development. Sopheon's solutions are designed to instead address the business
challenges associated with product innovation, including the management of
innovation risk and reward. Analysts have labelled Accolade as best-of-breed
among solutions in the product portfolio management sub-class.

A number of vendors of project portfolio management solutions that have
historically focused their software and go-to-market efforts on the project
management needs of corporate information technology organisations continued to
step up their attempts to migrate toward the product portfolio management
space. The increased number of competitors and new entrants into our market
will challenge our efforts to sustain a position of market leadership.

Sopheon has two principal offerings. Its Accolade solution is a modular
software system specifically designed to increase work efficiency and improve
decision-making in the development and management of new products. Sopheon's
Vision Strategistsolution automates and manages the customer's strategic
product planning process. Sopheon has integrated these software offerings into
a single solution that manages the complete life cycle of products from their
conception as raw ideas until they are retired from the marketplace.

The integration of Accolade and Vision Strategist creates the only
comprehensive strategic product planning and innovation process support
solution in the marketplace. The offering ties product, market and technology
roadmapping directly to the operational aspects of product development.
Moreover, we believe that our software can bring immediate value to
recession-plagued companies that need to reduce costs, without undercutting
their prospects for long-term growth. Our solutions help companies maximise
returns from available resources when times are tough, while also developing
programmes and strategies to enable them to accelerate out of the downturn and
emerge with increased competitive strength. In particular, our software can
help them with the following critical challenges:

  * Improve strategic agility and "uncertainty planning"
   
  * Make faster, better-informed portfolio decisions
   
  * Identify, prioritise and act on the most promising innovation opportunities
   
  * Keep daily operational activities aligned with organisational strategies
    for growth
   
  * Cut costs by improving innovation process and team efficiencies
   
People

Our ability to deliver value to our customers is a testament to Sopheon people
in all parts of our Company, many of whom have been working tirelessly for
several years to build the business we have today. We thank them for their
continuing contribution to our growing success. Over the last two years, we
have welcomed many new staff to the Sopheon team; by the end of 2008 we had 105
employees, compared to 65 at the end of 2006 and 92 at the end of 2007.

Sopheon's executive management team has been in place for several years and has
five members. Our chief executive officer, Andy Michuda, chief financial
officer, Arif Karimjee and I serve on the team, and also act as executive
directors. Our chief technology officer Paul Heller, and vice president of
research Huub Rutten, complete the group. Executive management is complemented
by a strong operational management team that lead the marketing, sales and
customer services functions in each of the US and Europe. The Sopheon plc Board
is made up of the three executive directors, augmented by three non-executive
directors who bring a wealth of knowledge and experience to our business.

Outlook

By the end of 2008, Sopheon had 157 licensed customers with strong
representation from each of our target markets. During the year, we were
recognised by members of the analyst community not just as a best-of-breed
offering, but as the most mature within our class of applications.

Companies understand the business importance of continued, prudent investment
in product innovation, and Sopheon addresses that need. We are enjoying
significant repeat business from our customer base, coupled with a good number
of new high quality clients; since the start of the market downturn,
organisations such as Bayer HealthCare, Burger King, Novartis, PepsiCo and the
U.S. Army have adopted our software. During the same period, existing customers
such as General Motors, Medtronic, Lockheed Martin, SABMiller and Verizon
Wireless extended their investment in our solutions.

Anecdotal evidence indicates that many of these investments were made not in
spite of the recession, but because of it. However, we are very conscious that
the current level of uncertainty in the economic environment is unprecedented,
and a number of major corporations find themselves fighting for survival.
Although our sales pipelines remain very active, some potential customers are
simply deferring all capital investment decisions, irrespective of their
potential return. Accordingly, it is tough to predict growth with any accuracy.
In response, we have developed tight operational plans that make spending
contingent on historic and forecasted revenue performance on a
quarter-by-quarter basis. This cautious mindset may well affect our growth
trajectory in the short-term, but will underpin all hiring and expenditure
decisions throughout 2009.

Revenue visibility for 2009 already stands at £5.4m. This gives us a solid base
from which to pursue our business goals. We believe that our solutions offer
compelling value to companies faced with the need to cut costs without
jeopardising their strategies for growth. However, the market promise is
countered by turmoil across the economic landscape. We face this uncertain
environment with caution, but with continued optimism.

Barry Mence

Chairman

25 March 2009

        CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2008        

                                                            2008           2007
                                                                               
                                                           £'000          £'000
                                                                               
Revenue                                                    9,304          6,332
                                                                               
Cost of sales                                            (2,304)        (1,703)
                                                                               
Gross profit                                               7,000          4,629
                                                                               
Distribution expense                                     (3,516)        (2,523)
                                                                               
Research and development expense                         (1,995)        (1,027)
                                                                               
Other administrative expense                             (1,289)        (1,462)
                                                                               
Total administrative expense                             (3,284)        (2,489)
                                                                               
Operating profit / (loss)                                    200          (383)
                                                                               
Finance income                                                55             70
                                                                               
Finance expense                                            (211)          (130)
                                                                               
Profit / (loss) before tax                                    44          (443)
                                                                               
Income tax expense                                          (15)              -
                                                                               
Profit / (loss)for the year(all attributable to               29          (443)
equity holders of the parent company)                                                 
                                                                               
Earnings / (loss) per share - basic and diluted            0.02p        (0.32p)
                                                                               

            CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE             

                      FOR THE YEAR ENDED 31 DECEMBER 2008                      

                                                            2008           2007
                                                                               
                                                           £'000          £'000
                                                                               
Exchange difference on translation of foreign                778           (27)
operations                                                                     
                                                                               
Net income / (expense)recognised directly in equity          778           (27)
                                                                               
Profit / (loss) for the financial year                        29          (443)
                                                                               
Total recognised income and expense for the year             807          (470)
(all attributable to equity holders of the parent                              
company)                                                                       
                                                                               

                CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2008                 

                                                            2008           2007
                                                                               
                                                           £'000          £'000
                                                                               
Non-current assets                                                             
                                                                               
Property, plant and equipment                                235            182
                                                                               
Intangible assets                                          4,706          3,725
                                                                               
Non-current receivables                                       12             10
                                                                               
                                                           4,953          3,917
                                                                               
Current assets                                                                 
                                                                               
Trade and other receivables                                3,568          2,221
                                                                               
Cash and cash equivalents                                  2,586          2,053
                                                                               
                                                           6,154          4,274
                                                                               
Total assets                                              11,107          8,191
                                                                               
Current liabilities                                                            
                                                                               
Short term borrowings                                      1,080            755
                                                                               
Deferred revenue                                           2,648          1,552
                                                                               
Trade and other payables                                   2,006          1,379
                                                                               
                                                           5,734          3,686
                                                                               
Non-current liabilities                                                        
                                                                               
Bank loans                                                 1,105          1,195
                                                                               
Total liabilities                                          6,839          4,881
                                                                               
Net assets                                                 4,268          3,310
                                                                               
Equity and reserves                                                            
                                                                               
Share capital                                              7,279          7,279
                                                                               
Other reserves                                            73,627         73,499
                                                                               
Profit and loss account and translation reserve         (76,638)       (77,468)
                                                                               
Total equity (all attributable to equity holders of        4,268          3,310
the parent company)                                                                

      
       CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2008      

                                                            2008           2007
                                                                               
                                                           £'000          £'000
                                                                               
Profit / (loss) for the year                                  29          (443)
                                                                               
Adjustments for non-cash and similar items                 1,551            661
                                                                               
Movements in working capital                                 143             24
                                                                               
Net cash generated from operating activities               1,723            242
                                                                               
Investing activities                                       (827)        (2,687)
                                                                               
Financing activities                                       (680)          3,452
                                                                               
Increase in cash and cash equivalents                        216          1,007

NOTES

1. Annual Report

The abridged financial information set out herein has been extracted from
financial statements approved by the directors on 25 March 2009, and which will
be delivered to the Registrar of Companies following the Company's annual
general meeting. The auditors have reported on these accounts and their report
was unqualified, but consistent with prior years, have drawn attention to the
uncertainty over going concern described below and did not contain statements
under the Companies Act 1985, section 237(2) or (3). This financial information
does not constitute statutory accounts as defined in section 240 of the
Companies Act 1985.

While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRSs), this announcement itself
does not contain sufficient information to comply with IFRSs. The Annual Report
and Financial Statements will be posted to shareholders shortly and thereafter
will be available from the Company's registered office at 40 Occam Road, Surrey
Research Park, Guildford, Surrey, GU2 7UG, and from the Company's website
www.sopheon.com.

2. Going Concern

The financial statements have been prepared on a going concern basis. In
reaching their assessment, the directors have considered a period extending at
least 12 months from the date of approval of these financial statements and
have considered both the forecast performance for the next 12 months and the
cash and financing facilities available to the Group.

In 2008, the Group achieved revenues of £9.3m and generated a profit of £
29,000. The directors are positive about the direction, focus and momentum of
the business and believe that the Group's existing resources and facilities
described below provide it with adequate funding to support its activities
through to the point at which they anticipate that operations will become cash
generative on a sustained basis. This is however dependent on the Group
continuing to deliver an adequate level of sales. Furthermore, the
time-to-close and the order value of individual sales can vary considerably,
factors which constrain the ability to accurately predict revenue performance,
and which are heightened by the tough economic conditions. These conditions are
also likely to result in customers taking longer to pay amounts owed to the
Group.

At 31 December 2008, the Group reported net assets of £4.3m and gross cash
resources of £2.6m. The Group has a loan note from BlueCrest Capital Finance
("BlueCrest") which is repayable in equal monthly installments of £63,000
through July 2011 and stood at £1.6m at year end. The Group also has access to
a bank line of credit with BlueCrest which is secured against the trade
receivables of Sopheon's North American business, and was fully drawn down at
31 December 2008 for a value of £521,000.

If sales fall short of expectations, or if the Group's bank facilities prove
insufficient, the Group may need to raise additional finance. Sopheon continues
to have access to the equity markets. In addition, the Group has access to an
equity line of credit facility from GEM Global Yield Fund Limited ("GEM") for
an aggregate of €10m, the current term of which expires in December 2009. The
facility originally expired in December 2005 and has been extended twice, each
time for an additional two year period. GEM's obligation to subscribe for
shares is subject to certain conditions linked to the prevailing trading
volumes and prices of Sopheon shares on the Euronext stock exchange. To date
Sopheon has made one call on the equity line of credit facility, raising just
under €1m in March 2004, leaving a maximum €9m potentially available.

The directors have concluded that these circumstances represent material
uncertainties, however believe that taken as a whole, the factors described
above enable the Group to continue as a going concern for the foreseeable
future. The financial information does not include the adjustments that would
be required if the Company or Group were unable to continue as a going concern.

3. Principal Accounting Policies

Basis of consolidation

The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company ("subsidiaries"). Control is
achieved where the Company has the power to govern the financial and operating
policies of an entity and to obtain benefits from its activities. All
intra-Group transactions, balances, income and expenses are eliminated on
consolidation.

Revenue recognition

Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided in
the normal course of business, net of discounts and sales related taxes. Sales
of software products are recognised on delivery, and when no significant vendor
obligations remain. Revenues relating to maintenance and post contract support
agreements are deferred and recognized over the period of the agreements.
Revenues from implementation and consultancy services are recognised as the
services are performed, or in the case of milestone based or long term
contracts, recognised on a percentage basis as the work is completed and any
relevant milestones are met, using latest estimates to determine the expected
duration and cost of the project.

Leases

Assets held under finance leases are recognised as assets of the Group at their
fair value at the inception of the lease or, if lower, at the net present value
of the minimum lease payments. The corresponding liability to the lessor is
included in the balance sheet as a finance lease obligation. Lease payments are
apportioned between finance charges and reduction of the lease obligation so as
to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are charged to profit or loss. Rentals payable under
operating leases are charged to profit or loss on a straight-line basis over
the term of the relevant lease.

Retirement benefit costs

Payments to defined contribution retirement benefit plans are charged as an
expense as they fall due. The Group does not operate any defined benefit
retirement benefit plans.

Treatment of foreign currencies for consolidation

For the purpose of presenting consolidated financial statements, the assets and
liabilities of the Group's foreign operations (including comparatives) are
expressed in sterling using exchange rates prevailing on the balance sheet
date. Income and expense items (including comparatives) are translated at the
average exchange rates for the period. Exchange differences arising (including
exchange differences on intra-Group loans) are classified as equity and
transferred to the Group's translation reserve. Such translation differences
are recognised in profit or loss in the period in which the foreign operation
is disposed of.

Deferred taxation

Deferred tax is recognised on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences, but deferred tax assets are
recognised only to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised.
Deferred tax is calculated at tax rates that have been enacted or substantively
enacted at the balance sheet date, and that are expected to apply in the period
when the liability is settled or the asset realised. Deferred tax is charged or
credited to profit or loss, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in
equity.

Property, plant and equipment

Computer equipment and fixtures and fittings are stated at cost less
accumulated depreciation and any accumulated impairment losses. Depreciation is
charged so as to write off the costs of assets over their estimated useful
lives, using the straight-line method. Assets held under finance leases are
depreciated over their expected useful lives on the same basis as owned assets,
or, when shorter, over the term of the relevant lease. The gain or loss arising
on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sale proceeds and the carrying amount
of the asset and is recognised in profit or loss.

Intangible assets - research and development expenditure

Development expenditure on internally developed software products is
capitalised if it can be demonstrated that:

  * it is technically feasible to develop the product
   
  * adequate resources are available to complete the development
   
  * there is an intention to complete and sell the product
   
  * the Group is able to sell the product
   
  * sales of the product will generate future economic benefits; and
   
  * expenditure on the product can be measured reliably
   
Capitalised development costs are amortised over the period over which the
Group expects to benefit from selling the product developed. Development costs
not satisfying the above criteria and expenditure on the research phase of
internal projects are recognised in profit or loss as incurred.

Share based payments

The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value (excluding the
effect of non-market-based vesting conditions) at the date of grant. The fair
value determined at the date of grant is expensed on a straight-line basis over
the vesting period, based on the Group's estimate of the shares that will
eventually vest and adjusted for the effect of non-market-based vesting
conditions. Fair value is measured by the binomial option-pricing model. The
expected life used in the model had been adjusted, based on management's best
estimate, for the effects of non-transferability, exercise restrictions and
behavioral considerations.

Business combinations

The acquisition of subsidiaries is accounted for using the purchase method. The
cost of the acquisition is measured at the aggregate of the fair values at the
date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the entity being
acquired, together with any costs directly attributable to the business
combination. The results of the acquired entities are included in the
consolidated income statement from the date on which effective control is
obtained. The identifiable assets, liabilities and contingent liabilities of
the entity being acquired that meet the conditions for recognition under IFRS 3
Business Combinations are recognised at their fair values of the date of
acquisition.

Identifiable intangible assets are capitalised at fair value as at the date of
acquisition. The useful lives of these intangible assets are assessed and
amortisation is charged on a straight-line basis, with the expense taken to the
income statement. Intangible assets are tested for impairment when a trigger
event occurs. Useful lives are also examined on an annual basis and
adjustments, where applicable are made on a prospective basis.

4. Revenue

All of the Group's revenue in respect of the years ended 31 December 2008 and
2007 derived from continuing operations and from the Group's single business
segment, the design, development and marketing of software products with
associated implementation and consultancy services.

Revenue visibility at any point in time comprises revenue expected from (i)
closed license orders, including those which are contracted but conditional on
acceptance decisions scheduled later in the year; (ii) contracted services
business delivered or expected to be delivered in the year; and (iii) recurring
maintenance, hosting and rental streams. The visibility calculation does not
include revenues from new sales opportunities expected to close during the
remainder of the year.

5. Share Based Payments

In accordance with IFRS2 Share based Payments, an option pricing model has been
used to work out the fair value of share options granted since November 2002,
with this being charged to the profit and loss account over the expected
vesting period and leading to a charge of £151,000 (2007: £149,000).

6. Income Tax

At 31 December 2008, tax losses estimated at £70 million were available to
carry forward by the Sopheon Group, arising from historic losses incurred. An
aggregate £22 million of these losses are subject to restriction under section
392 of the US Internal Revenue Code due to historical changes of ownership.
Notwithstanding the availability of tax losses, Alternative Minimum Tax ("AMT")
is payable on the profits of our US subsidiaries. For AMT purposes, the offset
of prior year tax losses is restricted in to 90% of current year taxable
profits, with AMT chargeable on the remainder at a rate of 20%.

7. Earnings per Share

The calculation of basic loss per ordinary share is based on a loss of £29,000
(2007: loss of £443,000), and on 145,579,000 (2007: 140,286,000) ordinary
shares, being the weighted average number of ordinary shares in issue during
the year. The effect of all potential ordinary shares is antidilutive.

8. EBITDA

EBITDA is defined as earnings before interest, tax, depreciation and
amortisation and can be arrived at by adding back depreciation and amortisation
charges amounting to £920,000 (2007: £496,000) to the operating profit of £
200,000 (2007: loss of £383,000).

9. Intangible Assets

In accordance with IAS 38 Intangible Assets, certain development expenditure
must be capitalised and amortised based on detailed technical criteria, rather
than automatically charging such costs in the profit and loss account as they
arise. This has led to the capitalisation of £797,000 (2007: £785,000), and
amortisation of £459,000 (2007: £233,000) during the year. A further £365,000
(2007: £169,000) of amortisation was incurred during the year relating to
intangible assets acquired with Alignent. In addition, during 2008 the
recurring income from the acquired Alignent customer base reduced, due to a mix
of factors including the conversion of certain rental licenses to perpetual,
changes in rental levels, and cancellations. The overall reduction exceeded the
rate of attrition of such recurring income estimated in the original valuation
exercise, leading to impairments in the carrying value of the acquired Alignent
intangible assets of £324,000.

10. Cautionary Statement

Sopheon has made forward-looking statements in this press release, including
statements about the market for and benefits of its products and services;
financial results; product development plans; the potential benefits of
business relationships with third parties and business strategies. These
statements about future events are subject to risks and uncertainties that
could cause Sopheon's actual results to differ materially from those that might
be inferred from the forward-looking statements. Sopheon can make no assurance
that any forward-looking statements will prove correct.