The Group is pleased to report that revenues and all key profit indicators are ahead of last year and in line with market expectations:

• Revenue up 5% to £53.7 million.
• Maintenance revenues increased by 10% to £23.6m representing 44% of total revenues.
• Adjusted EBITDA* up 8% to £6.8 million, reported EBITDA up 35% with a consistent level of R & D expenditure.
• Profit before tax up 84% to £2.7m.
• Operating cash flow up 8% to £5.4 million.
• Adjusted diluted EPS* up 2% to 5.0p, reported EPS up 83% to 2.2p
• Tenth consecutive half year in line with or better than market expectations.
• New customers and sales pipeline are significantly ahead of last year.
• On 5 August 2005 the Group acquired the SunSystems activities of Eclipse, a leading reseller in the Asia Pacific region with operations in Japan, Thailand, Singapore, Malaysia and Hong Kong, for approximately US$2.5 million.
• On 27 June 2005 the Group acquired MIS Spain for approximately €0.4 million.
• Interim dividend up 50% to 0.75p per share (2004: 0.50p).

* before restructuring charge of £1.3 million in 2004.

Group strategy

The Company continues to adopt a proactive approach to increasing its global footprint, business opportunities, revenues and shareholder value.

Since the start of the year we have successfully repositioned the Group and remain the only global mid-market vendor in the world to own the intellectual property rights to a cohesive portfolio of General Ledger, Reporting and Business Intelligence software products. These are encapsulated into our Financial and Performance Management solutions.

The Company's products address the need for accurate, real time access to a unified view of financial and wider management information to improve insight into operational and financial performance. We implement business solutions in an open environment that integrate with, and operate across, multiple financial and line of business applications and data. Finance departments can now select from a suite of solutions comprising core financial transactional processing functionality which delivers reactive, historic data along with extensive performance management products to enable effective reporting, detailed analysis, forecasting, planning, budgeting, consolidation and risk management tools from a single global vendor. Our mission is to empower organisations through the provision of enterprise wide finance and management information in the right format, to the right people, at the right time.

Our commitment to enhance our proposition remains firm and we have launched new modules and functionality across our portfolio. Most notably, enhanced purchasing, time and expense management modules to our core SunSystems proposition; Serduct Studio which enables an organisation to report across multiple finance and line of business applications in real time; MIS Balanced Scorecard which helps organisations to effectively communicate and execute corporate strategy and vision using consistent and comprehensive data has been extensively rolled out; Pegasus has launched Opera II Version 4 which combines the rich financial and management reporting and analytical capabilities of Opera II with the proven and world leading technology behind Microsoft's SQL Server database. We have also elected to embrace Microsoft's .Net technology into the ongoing architecture of our entire product range and are optimistic that we shall release our first products on this platform before the end of 2005.

The Group's strategy continues to be global in its reach, product offering and scale. Our four regional direct sales and services organisations and extensive partner community successfully work together as a cohesive team to develop, deliver and support SunSystems, MIS, Vision, Pegasus, REDtechnology, ncSoft and Foundation Systems solutions to over 50,000 customer sites in 194 countries around the world.

The result of our approach and global agenda is well defined. We are growing, organically and by acquisition, to deliver increased profitability and cash generation.

Half year review

2005 has started positively for the Group and we have delivered on our agenda to further integrate our global operations, solutions and infrastructure. This, combined with the investment made in the business, has been instrumental in our encouraging performance in the first half of the year and underpins our positive outlook for the second half.

We are pleased to report 5% growth in turnover and 8% growth in EBITDA (before restructuring charge in 2004) for the half year. Significant revenue growth was achieved in a number of markets, notably the Americas and Asia Pacific. Moreover the EBITDA margin has improved slightly to 12.7% from 12.4% last year. This has been achieved during a period where there has been an increase in staff employed in the Group, mainly in the sales and consulting functions from 1,323 to 1,406 by 30 June 2005. This has been further increased to 1,446 by the acquisition of the SunSystems activities of Eclipse in the Far East on 5 August.

We have recorded organic revenue growth of approximately 3% by winning contracts with new and existing customers. Recent successes include: a leading global telecoms company who is benefiting from Systems Union's suite of business intelligence and analytics solutions; a public sector department in the UK has also selected a suite of financial management and analytics solutions from the Group as has a Japanese manufacturer; whilst an Australian-based not for profit organisation has deployed our pan-application reporting and analytics tools; in addition a highly successful food retailer has selected our financial and performance management and analytics solutions. Since 30 June we have also secured wins with one of the Big 4 international accounting and consultancy firms based in Australia and a significant fleet management organisation operating in thirty countries.

Cash generated from operations of £5.4m increased by 8%. At 30 June 2005 the Company had gross cash balances of £17.8m compared to £16.5m at 31 December 2004. Against these gross cash balances there was a bank loan of £15m.

Management

The Systems Union global management team continues to be strengthened and during the first half of the year we have made several key strategic appointments in our four global regions. Not only have we invested in our management team, but we have significantly increased the number of our personnel. Such investment and the combined commitment and professionalism of the Systems Union global team will enable us to ensure that we continue to deliver our agenda to retain and build on our position as one of the world's most successful global software companies.

Dividend

The interim dividend has been increased to 0.75p (2004:0.5p) and reflects a policy of realigning the proportion of dividend paid at the interim stage. Payment will be made on 11 October 2005 to shareholders on the register on 9 September 2005.

Outlook

We are encouraged by the increase in revenues and operational profit, whilst also investing in additional sales, consulting and marketing activities. These efforts, together with our strategic agenda, have resulted in a significant increase in our sales pipeline and new business opportunities.

We look forward to the second half of the year with continued optimism.


Bob Morton, Chairman
Paul Colemen, CEO
15 August 2005