, Ext Tel: Fax:

(1)

Page 1 of 8

For Additional Information Contact:

3340 Peachtree Road, N.E.

Dianne Edwards, Seagull Software

Atlanta, GA 30326 USA

+1 404 760 1560, Ext. 2312

Tel: +1 404 760 1560

Fax: +1 404 760 9629

Mory Motabar, Seagull Software www.seagullsoftware.com

+31 (0)78 6322 800, ext. 932

For Immediate Release

Seagull Software Announces Year-to-Date and

Q3 Results for Financial Year 2006

Revenue Up 16% Over 2005

ALLFINANCIALDATAINCLUDEDINTHISPRESSRELEASEIS

PRESENTEDINUSDOLLARSANDISNOTAUDITED

DORDRECHT, THE NETHERLANDS and ATLANTA – 17 February 2006 – Seagull Software

(AEX: SEAGULL), a leading provider of software products for connecting legacy applications

to Internet architectures, today announced that revenue for the nine-month period ended 31

January 2006 was $20.3 million, an increase of 16% as compared to $17.5 million for the

corresponding period in the previous financial year. On a pro forma basis net income for the

nine-month period ended 31 January 2006 was $310K, as compared with a loss of $2.8 million

for the corresponding period last year. On a pro forma basis earnings per share were $0.03,

as compared to a loss of $0.34 per share for the corresponding period last year. Cash

increased from $5.2 million at the end of Q2 FY06 to $6.1 million at the end of Q3 FY06.

“To provide a consistent basis for comparison against performance for the same period last

year, we are also providing pro forma results that exclude $182K in deferred stock

compensation costs resulting from compliance with IAS, and $563K in intangible asset

amortization costs associated with the acquisition of SofTouch in April 2005 and Oak Grove in

July 2005,” commented Mory Motabar, Seagull Software Chief Financial Officer.

(2)

Seagull Software Announces Year-to-Date and Q3 Results for Financial Year 2006 Page 2 of 8

On an International Accounting Standards (IAS) basis, the Company reported a net loss of

$435K for the nine-month period ended 31 January 2006; including deferred stock

compensation costs and amortization of intangible assets.

“Seagull Software has achieved continued revenue growth on both a year-over-year and

quarterly basis,” said Don Addington, Seagull Software CEO and President. “We’ve added

117 new customers to the installed base this year, not counting the customers who joined as

a result of our acquisitions. We’re pleased to report that license revenue has increased 20

percent year-over-year, which drives ongoing consulting and maintenance revenues.”

Gross margin for the nine-month period increased from $13.3 million or 76% of total revenues

to $16.4 million or 81% of total revenues.

For the nine-month period, total operating expense was $17.2 million as compared with $16.1 million in the corresponding period of the previous financial year, with most of the additional cost resulting from headcount increases associated with the SofTouch and Oak Grove acquisitions.

Quarterly Results

For the quarter ended 31 January 2006, the Company achieved revenue of $6.8 million, an

increase of 8% as compared to revenue of $6.3 million for the corresponding quarter in the

previous financial year (Q3 FY05). On a pro forma basis net loss for the quarter was $263K,

as compared to Q3 FY05 net income of $46K. On an IAS basis net loss for the quarter was

$536K, as compared to Q3 FY05 net income of $30K.

Gross margin for Q3 FY06 was $5.3 million or 79% of total revenues, as compared with gross

margin of $4.9 million or 78% of total revenues for the corresponding quarter in the previous

year.

Total operating expenses related to sales & marketing, research & development and

administrative functions were $5.9 million, as compared with $4.9 million reported for the

same period in the previous financial year. Sales & marketing expenses increased from $2.9

million to $3.4 million, reflecting headcount increases and investment in the development of

a new corporate Web site. Research & development costs increased from $1 million to $1.4

million due primarily to amortization of intellectual property and additional operating costs

associated with the SofTouch and Oak Grove acquisitions.

(3)

Q3 Business Highlights

During Q3 FY06, 31 new customers joined the Seagull Software installed base. The Company

closed new and follow-on transactions with customers such as Sandia National Laboratories,

LiquidLogic, Legal and General Group PLC, SMABTP, Kabel Baden and Regiopolitie.

Other highlights include:

• The Technology Association of Georgia (TAG) announced Seagull Software as one

of the Top 40 Innovative Technology Companies in Georgia for 2006. The Top 40

candidates are outstanding examples of the breadth of exciting technologies that are

being developed and commercialized in Georgia. The Innovators were chosen based

on degree of innovation; scope and financial impact of innovation; likelihood of

success; and promotion of Georgia's innovative efforts nationally and internationally.

• LegaSuite Integration Engine Earns IBM ServerProven Status. In January we

announced that LegaSuite® Integration Engine has achieved IBM ServerProven

validation, joining previously–validated products BlueZone™ terminal emulator and

J Walk® and WinJa® (now known as LegaSuite GUI). LegaSuite Integration Engine

runs on IBM eServer zSeries, xSeries and iSeries systems. The IBM ServerProven status

requires verification from our customers that LegaSuite Integration Engine is in

production use on IBM platforms. Our customers use LegaSuite Integration Engine on

all three IBM eServer platforms to transform legacy applications into Web services for

SOA.

• LegaSuite for CICS

™

_{Announced. In December, the industry's most flexible and}

comprehensive solution for transforming CICS applications into SOA assets was

announced. Among its many unique features, LegaSuite for CICS supports multiple

run-time architectures from one development effort and offers integrated Business

Process Management (BPM) workflow capabilities. Customers can implement

LegaSuite with no changes to their CICS applications, and with little or no coding.

• CEO Named to Technology Association of Georgia Board. Don Addington,

President and CEO was appointed to Technology Association of Georgia's (TAG) board

of directors in November. As a board member, Mr. Addington will participate in a

statewide initiative to expanding the size, achievements and influence of Georgia's

technology sector. TAG’s 2100-plus members act as a primary catalyst in fostering a

rich environment for economic development within Georgia's technology community.

Participation also puts the Seagull Software brand in front of the State’s most

prominent CIO’s, who are potential purchasers of the Company’s technology.

• Seagull Software Joins Consortium Responding to EU Commission Tender. In

November, Seagull Software submitted a research project to the EU Commission.

Using procedural models, methods and tools, the project entitled Stepwise Migration

of Legacy Systems to Service Oriented Systems --"SAMSON"-- aims to assist the

conversion of rigid corporate IT systems to flexible service-oriented architectures

(SOA) that are easily tailored to changing business procedures. The consortium

includes such companies as HP, Intesi, and Q-Sphere as well as the Universities of

Vienna and Stuttgart and research institutes in Slovenia and Lithuania.

• Partner Agreement with Kapow Technologies. Kapow Technologies, a leader in

Web integration, announced in November that the companies have entered into a

partnering agreement under which Seagull Software will market and sell the Kapow

Web Integration platform in conjunction with its LegaSuite

®

_{platform. With the}

addition of the Kapow Web Integration Platform, Seagull Software now offers the

option of integrating with any application or information accessible through a Web

(4)

browser, thus expanding the company's offerings to meet all of an enterprise's SOA

integration needs.

The Company plans to publish fourth quarter and annual financials for the Financial Year

ending 30 April 2006 in June.

###

Financial Statements Follow on Next Page

About Seagull Software

Seagull Software specializes in technology that transforms “legacy” applications into SOA-compliant Web services, helping enterprises achieve exponentially faster IT support for business change, governance and compliance. Our LegaSuite® software platform includes integration, GUI, BPM and terminal emulation technology. With LegaSuite, customers connect legacy applications on IBM

mainframe, ICL mainframe, iSeries, UNIX/VT and Windows client/server platforms to the Web, to other middleware and to newer-generations of applications such as portals, CRM and SCM. LegaSuite is based on open standards including Web services, XML, J2EE and .NET. Powerful and innovative tools require no coding, which means rapid results, reduced risk and no maintenance burden. Committed to providing the best customer experience in the industry, Seagull Software’s technology is in use in more than 8,000 business and government organizations worldwide, and by millions of end users. Seagull Software has direct operations in the United States, the Netherlands, UK, France, Germany and Australia, supplemented by distributors serving approximately 30 additional countries. For more information, visit www.seagullsoftware.com.

NOTE TO EDITORS: The correct usage of our company name is Seagull Software.

Forward-Looking Information: All statements in this press release which address operating

performance, events or developments that we expect or anticipate will occur in the future, including statements expressing general optimism about future operating results and non-historical information, are forward-looking statements. These forward-looking statements are, and will be, based on

management’s then-current views and assumptions regarding future events and operating performance. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not necessarily limited to management’s ability to manage growth, and hire and retain qualified employees; unpredictable customer demand; intense competition; rapid technological change; unpredictable market acceptance of new products; and market instability and/or reduction in software purchasing caused by exceptional circumstances

(5)

Seagull Holding N.V.

Consolidated Statement of Operations - Pro Forma

(in thousands of US Dollars except share data)

9 Month Period

Ended 31 Jan 2006 Ended 31 Jan 2005 9 Month Period

REVENUES

License revenue 8,622 7,186

Maintenance and service revenue 11,713 10,295 20,335 17,481

COST OF REVENUES

Cost of license revenue 45 45

Cost of maintenance and service revenue 3,888 4,084 3,933 4,129

GROSS MARGIN 16,402 13,352

OPERATING EXPENSES

Sales and marketing 9,817 8,408

Research and development 3,544 3,476

General and administrative 3,143 3,105

Restructuring expense - 1,093

16,504 16,082

INCOME (LOSS) FROM OPERATIONS (102) (2,730)

Financial income and expense (net) 159 41

Exchange gain (loss) 154 (77)

INCOME (LOSS) BEFORE INCOME TAX 211 (2,766)

Income tax (99) 13

NET INCOME (LOSS) 310 (2,779)

NET INCOME (LOSS) PER SHARE

Basic 0.03 (0.34)

Diluted 0.03 (0.32)

AVERAGE NUMBER OF SHARES

Basic 8,812,243 8,234,591

Diluted 9,649,751 8,929,878

Note: Pro forma financials exclude (1) deferred stock compensation and (2) amortization of intangible assets associated with the April 2005 acquisition of SofTouch Systems and the July 2005 acquisition of Oak Grove Systems.

(6)

Consolidated Statement of Operations- IAS

(in thousands of US Dollars except share data) Ended 31 Jan 2006 9 Month Period Ended 31 Jan 2005 9 Month Period

REVENUES

License revenue 8,622 7,186

Maintenance and service revenue 11,713 10,295

20,335 17,481

COST OF REVENUES

Cost of license revenue 45 45

Cost of maintenance and service revenue 3,900 4,090

3,945 4,135

GROSS MARGIN 16,390 13,346

OPERATING EXPENSES

Sales and marketing 9,887 8,415

Research and development 4,132 3,482

General and administrative 3,218 3,126

Restructuring expense - 1,094

17,237 16,117

INCOME (LOSS) FROM OPERATIONS (847) (2,771)

Financial income and expense (net) 159 41

Exchange gain (loss) 154 (77)

INCOME (LOSS) BEFORE INCOME TAX (534) (2,807)

Income tax (99) 13

NET INCOME (LOSS) (435) (2,820)

NET INCOME (LOSS) PER SHARE

Basic (0.05) (0.34)

Diluted (0.05) (0.32)

AVERAGE NUMBER OF SHARES

Basic 8,812,243 8,234,591

(7)

Consolidated Balance Sheet - IAS

(in thousands of US Dollars) 31 Jan 2006 30 Apr 2005

ASSETS

Non-current assets

Property, plant and equipment 626 786

Intangible assets 5,472 4,956

Deferred tax 1,063 1,063

7,161 6,805

Current assets

Cash and cash equivalents 6,093 6,912 Trade receivables 3,362 3,676 Prepaid expenses 725 652 Other receivables 543 833 10,723 12,073 TOTAL ASSETS 17,884 18,878

EQUITY AND LIABILITIES

Equity attributable to shareholders

Issued capital 324 337 Reserves 6,260 5,957 6,584 6,294 Non-Current Liabilities Long-Term Liabilitties 969 1,429 Current liabilities Accounts payable 572 1,053 Payroll accruals 1,008 1,334 Corporation taxes - 18 Other current liabilities 1,959 2,014

Deferred revenues 6,792 6,736

10,331 11,155

(8)

Consolidated Statement of Cash Flow - IAS

(in thousands of US Dollars) 9 Month Period Ended _{31 Jan 2006}

CASH FLOW FROM OPERATIONS

Net income (loss) (435)

Adjustments to reconcile net income/loss to net cash provided by operating activities: Depreciation and amortization 903

Stock options 182

Movement in working capital: Trade receivables 179 Prepaid expenses (96) Other receivables 242 Accounts payable (456) Payroll accruals (281) Corporation taxes (16) Deferred revenue 185

Other current liabilities 55

Deferred Tax - Translation difference (169)

293

CASH FLOW FROM INVESTING ACTIVITIES Tangible assets (160)

Intangible assets (1,104) Translation difference 30

(1,234) Long-term loan (490)

Cash receipts on issue of shares (net of expenses) 746

256

Effect of exchange rate on cash (134)

Total net cash flow (819)

Opening balance cash and cash equivalents 6,912

, Ext Tel: Fax:

For Additional Information Contact:

3340 Peachtree Road, N.E.

Dianne Edwards, Seagull Software

Atlanta, GA 30326 USA

+1 404 760 1560, Ext. 2312

Tel: +1 404 760 1560

[email protected]

Fax: +1 404 760 9629

[email protected]

Mory Motabar, Seagull Software www.seagullsoftware.com

+31 (0)78 6322 800, ext. 932

[email protected]

For Immediate Release

Seagull Software Announces Year-to-Date and

Q3 Results for Financial Year 2006

Revenue Up 16% Over 2005

DORDRECHT, THE NETHERLANDS and ATLANTA – 17 February 2006 – Seagull Software

(AEX: SEAGULL), a leading provider of software products for connecting legacy applications

to Internet architectures, today announced that revenue for the nine-month period ended 31

January 2006 was $20.3 million, an increase of 16% as compared to $17.5 million for the

corresponding period in the previous financial year. On a pro forma basis net income for the

nine-month period ended 31 January 2006 was $310K, as compared with a loss of $2.8 million

for the corresponding period last year. On a pro forma basis earnings per share were $0.03,

as compared to a loss of $0.34 per share for the corresponding period last year. Cash

increased from $5.2 million at the end of Q2 FY06 to $6.1 million at the end of Q3 FY06.

“To provide a consistent basis for comparison against performance for the same period last

year, we are also providing pro forma results that exclude $182K in deferred stock

compensation costs resulting from compliance with IAS, and $563K in intangible asset

amortization costs associated with the acquisition of SofTouch in April 2005 and Oak Grove in

July 2005,” commented Mory Motabar, Seagull Software Chief Financial Officer.

On an International Accounting Standards (IAS) basis, the Company reported a net loss of

$435K for the nine-month period ended 31 January 2006; including deferred stock

compensation costs and amortization of intangible assets.

“Seagull Software has achieved continued revenue growth on both a year-over-year and

quarterly basis,” said Don Addington, Seagull Software CEO and President. “We’ve added

117 new customers to the installed base this year, not counting the customers who joined as

a result of our acquisitions. We’re pleased to report that license revenue has increased 20

percent year-over-year, which drives ongoing consulting and maintenance revenues.”

Gross margin for the nine-month period increased from $13.3 million or 76% of total revenues

to $16.4 million or 81% of total revenues.

Quarterly Results

For the quarter ended 31 January 2006, the Company achieved revenue of $6.8 million, an

increase of 8% as compared to revenue of $6.3 million for the corresponding quarter in the

previous financial year (Q3 FY05). On a pro forma basis net loss for the quarter was $263K,

as compared to Q3 FY05 net income of $46K. On an IAS basis net loss for the quarter was

$536K, as compared to Q3 FY05 net income of $30K.

Gross margin for Q3 FY06 was $5.3 million or 79% of total revenues, as compared with gross

margin of $4.9 million or 78% of total revenues for the corresponding quarter in the previous

year.

Total operating expenses related to sales & marketing, research & development and

administrative functions were $5.9 million, as compared with $4.9 million reported for the

same period in the previous financial year. Sales & marketing expenses increased from $2.9

million to $3.4 million, reflecting headcount increases and investment in the development of

a new corporate Web site. Research & development costs increased from $1 million to $1.4

million due primarily to amortization of intellectual property and additional operating costs

associated with the SofTouch and Oak Grove acquisitions.

Q3 Business Highlights

During Q3 FY06, 31 new customers joined the Seagull Software installed base. The Company

closed new and follow-on transactions with customers such as Sandia National Laboratories,

LiquidLogic, Legal and General Group PLC, SMABTP, Kabel Baden and Regiopolitie.

Other highlights include:

•

The Technology Association of Georgia (TAG) announced Seagull Software as one

of the Top 40 Innovative Technology Companies in Georgia for 2006. The Top 40

candidates are outstanding examples of the breadth of exciting technologies that are

being developed and commercialized in Georgia. The Innovators were chosen based

on degree of innovation; scope and financial impact of innovation; likelihood of

success; and promotion of Georgia's innovative efforts nationally and internationally.

•

LegaSuite Integration Engine Earns IBM ServerProven Status. In January we

announced that LegaSuite® Integration Engine has achieved IBM ServerProven

validation, joining previously–validated products BlueZone™ terminal emulator and

J Walk® and WinJa® (now known as LegaSuite GUI). LegaSuite Integration Engine

runs on IBM eServer zSeries, xSeries and iSeries systems. The IBM ServerProven status

requires verification from our customers that LegaSuite Integration Engine is in

production use on IBM platforms. Our customers use LegaSuite Integration Engine on

all three IBM eServer platforms to transform legacy applications into Web services for

SOA.

•

_{Announced. In December, the industry's most flexible and}

_{platform. With the}