Formula Systems Reports Record Second Quarter Results

First Six Months Net Income of $25.2 million

August 28, 2007

Herzliya, Israel – August 28, 2007 – Formula Systems (1985) Ltd. (NASDAQ: FORTY) a leading provider of information technology products, solutions and services, announced today results for the six months and second quarter of 2007.

Revenues for the second quarter totaled 124.7 million an increase of 19% compared to $104.6 million in the second quarter of 2006.
Revenues for the six months ended June 30, 2007 totaled $240.8 million compared to $202.0 million in the same period of 2006, an increase of 19%.

Operating income in the second quarter of 2007 was $6.7 million compared to $2.7 million in the same quarter of 2006, an increase of 45%.
Operating income in the first half of 2007 was $13.5 million compared to $5.2 million in the first half of 2006, an increase of 158%.

Net income in the second quarter of 2007 was $22.3 million compared to net income of $0.5 million in the second quarter of 2006. Net income in the first six months of 2007 was $25.2 million compared to $4.6 million in the same period of 2006.

In the second quarter we sold our entire holdings in BluePhoenix Solutions Ltd which resulted in capital gain for us of approximately $18 million.

Gad Goldstein, President & CEO of Formula, commented: "Formula has always been known as a company that manages and nurtures companies in the IT industry and not as a passive holding company. Our recent activities include:

• A $60 million debenture offering in our subsidiary Matrix to fund its continued rapid growth in the local and international markets;
• Completion of the two year reorganization plan in our subsidiary Sapiens by execution of a $20 million private placement  in order to ensure resources for its development;
• And especially the realization of our entire holdings in BluePhoenix, a company that we built and nurtured over 14 years, for a consideration of approximately $64 million.

These activities put Formula in an exceptional position to accelerate value enhancement to its investors."

"Formula and its business units have additional assets that were nurtured over the years and that have matured to a potential sale which may produce substantial capital gains. On the other hand Formula has over $60 million in cash and zero debts which allows us to consider additional investments to our portfolio.
It is my belief that the latitude and flexibility that we have created will enable Formula to react swiftly and efficiently to any possible market fluctuations in these turbulent times," added Goldstein.

Click here to download Formula Systems Q2 07 Results

About Formula
Formula Systems Ltd. is a global information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and providing computer-based business solutions.

Statements made in this press release that are not historical facts are forward-looking statements. Such statements involve various risks that may cause actual results to differ materially. These risks and uncertainties include, but are not limited to: market demand for the company’s products, dependence on strategic partners, integration of new business, successful implementation of Formula’s products, economic and competitive factors, international market conditions, management of growth, technological developments, the ability to finance operations and other factors which are detailed in Formula’s Securities and Exchange Commission filings, including its most recent report on Form 20‑F. Formula undertakes no obligation to publicly release any revision to any forward-looking statement.

Except for historical information contained herein, the matters set forth in this release are forward-looking statements that are dependent on certain risks and uncertainties, including such factors, among others, as market acceptance, market demand, pricing, changing regulatory environment, changing economic conditions, risks in new product and service development, the effect of the Company's accounting policies, specific system configurations and software needs of individual customers and other risk factors detailed in the Company's SEC filings.

Contact:

Israel:	Gad Goldstein, President, Formula Systems Ltd.
	Naamit Salomon, CFO, Formula Systems Ltd. +972-9-959-8800