Seagull Software Announces Financial Results for
Second Half and Full Year Ended 30 April 2005
Reports $1.9 Million Profit and 10% Growth for Second Half,
Full-Year Loss Reduced from $4 Million to $908K and
Full-Year Revenue Up 2%
all financial data included in this press release is
presented in us dollars and is fully audited

Seagull Software (AEX: SEAGULL), a leading provider of software products for transforming legacy applications into Web services for service-oriented architecture, today reported financial results for the second half (H2 FY05) and the full financial year ended 30 April 2005 (FY 2005).

Total revenue for H2 FY05 was $12.2 million, an increase of 10% as compared with the first half of the financial year. Net income for H2 FY05 was $1.9 million, as compared to a loss of $2.8 million for the first half of the year.

For the full financial year, total revenue was $23.4 million, an increase of 2% as compared with total revenue of $22.9 million for the previous year. The Company reported a net loss of $908K for FY 2005, as compared with a net loss of $4 million in FY 2004.

Net loss for FY 2005 was $0.11 per share as compared with a net loss per share of $0.52 in the previous financial year. On a fully diluted basis, the FY 2005 net loss per share was $0.10 as compared with a net loss per share of $0.46 in the previous year.

Total license revenue for H2 FY05 was $5.2 million, an increase of 15% from $4.5 million in the first half. Maintenance and service revenues for H2 FY05 were $7.1 million as compared with $6.6 million in H1 FY05.

For the full year, license revenue was $9.7 million (FY 2004 $10.6 million). Maintenance and service revenues grew from $12.2 million in to $13.7 million in FY 2005.

"We are pleased to report a significant improvement in both half-over-half and year-over-year results," said Seagull Software CEO and President Don Addington. "In FY 2005 we reduced expenses by 9%, grew maintenance revenues by 14% and grew consulting revenues by 8%. The software industry still remains vulnerable to quarterly fluctuations in license revenues, so we’ve worked successfully to grow the maintenance and consulting line items. FY 2005 results show good progress in overall performance on both an EBITDA and net basis."

Geographically, the Americas region contributed 69% of total revenues in FY 2005 with the remaining 31% generated by Europe and Asia Pacific, in line with results from the previous year.

Total gross margin for FY 2005 was $18 million or 77% of revenues, as compared with $17.9 million (78% of revenue) for the previous year. Gross margin on license revenue was $9.6 million (FY 2004 $10.5 million). Maintenance and service gross margin was $8.4 million as compared with $7.4 million in FY 2004.

"Our growing maintenance and service revenues also contributed higher gross margin this year," commented Seagull Software Chief Financial Officer Mory Motabar.

Total operating expenses (excluding restructuring expense) were $20 million, a reduction of 9% as compared with total operating expense of $22 million in FY 2004. Sales and marketing expenses were $11.3 million (FY 2004: $12.5 million). Research and development expenses decreased from $5.3 million to $4.5 million as a result of consolidation of European development labs, now concentrated in the Netherlands. General and Administrative expenses including the finance, IT, maintenance renewal, HR, and administration departments as well as legal and accounting fees were $4.2 million (FY 2004: $4.1 million).

Total cash balance increased from $6.4 million at the end of H1 FY05 to $6.9 million on 30 April 2005. Days Sales Outstanding (DSO) on 30 April 2005 was 42 days, comparing very favorably with industry averages of more than 60 days.

"We continue to experience outstanding DSO, reflecting customer satisfaction with our products and services," said Mr. Motabar.