not bad at all, and wont be a fail either as no holes in it as far as I can see.
run a grinder up n down the sill to remove all the loose rust, stonechip paint and underseal, then give it a coat of deox gel to kill the rust. cover with clingfilm if possible to keep it moist, or just re-apply every now & again. that should kill all the remaining rust. give it a coat of good zinc primer, then a coat of a good chassis paint such as por15. then some underseal to finish the job and if you want some body colour on the ouside of the sill to neaten it up