17 June 2005
AGM Statement
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At the Annual General Meeting of Sopheon plc (Sopheon) to be held later today, the Chairman of the board will give shareholders an update on the business. This will include the following statement:
"I am pleased to report that Sopheon continues to make significant strategic and operational advances in the pursuit of its core business goals. In our update on Sopheon's first-quarter performance, published in April, we noted that the period included revenue from three new Accolade license contracts and seven extension orders with existing customers for additional user licenses, consultancy or hosting services. There have been further successes during the second quarter, and we are endeavouring to close on several more contracts before the end of June. At the present time, our client base includes 57 licensed customers, and Accolade is now being used in 48 countries around the globe. These totals do not include stand-alone pilot or consultancy clients, nor users of our small scale lab solution in the Netherlands. I would like to highlight two other points. First, customers have historically built up large license investments by adding users over time; last year, three customers each contracted for a license value in excess of $600,000 in a single transaction - two of these sales were concluded in the final days of 2004, highlighting the significant effect on our results of large individual contract wins. Second, our recurring maintenance base has doubled since the start of 2003, to £1.1 million as we entered 2005.
The prospects for growth continue to be positive. A number of IT research and advisory firms are forecasting that Product Portfolio Management (PPM) will be one of the fastest growing PLM categories during the next three years. This momentum is attracting increasing interest from traditional software vendors. Some are achieving market entry through M&A activity; others are looking to extend the functionality and content of their existing software suites to address PPM needs. We are confident that Accolade, with its deep domain strength and specific out-of-the-box functionality, continues to lead the market. In addition, Sopheon is actively developing partnerships to bolster both our strategic and channel strength in this changing competitive landscape. The alignment of Accolade with Microsoft technology is a key example of these efforts, and the benefits have come through firmly in the latest release of Accolade. Version 6.0 was a landmark release, supported by Microsoft both in terms of R&D investment and marketing activity in Europe and America, and has been very well received by market analysts. Having judged its Collaborative Product Development pilot initiative a business success, Microsoft is now taking steps to implement the program on a global scale and is also introducing several other potential partners to Sopheon.
Our continued focus on growing our global ecosystem has resulted in agreements with new reseller partners, including Deloitte & Touche in South Africa, Inogate in Portugal, Team Progress in New Zealand and Australia, and ASI in South Korea. In parallel with these developments, Sopheon has begun to pursue a number of other partnering opportunities, and we have also given serious consideration to a small number of potential M&A transactions. I am pleased in this context to announce today the signature of a letter of intent to augment our relationship with Team Progress through a financial investment in their Sopheon reseller business. Further details of these initiatives will be announced in due course.
With the rate of market change growing in speed and complexity, and the volume of competitor activity steadily escalating, we believe that it is essential to position Sopheon to protect and extend its established lead in the PPM market. Two weeks ago we undertook a share placing on AIM, boosting our cash resources at the end of May to over £2 million, to enable Sopheon to take timely advantage of opportunities for business expansion, and to act with strength in the increasingly dynamic market environment."