- Leading Software as a Service (SaaS) provider for security continues global expansion and strengthens market leadership -

London – June 12, 2008 – MessageLabs, a leading provider of integrated messaging and web security services to businesses worldwide, today announced its financial results for the year ended 31 July 2007, its sixth consecutive year of revenue growth in excess of 20%.

Having expanded its service offerings, global reach and leadership position, MessageLabs reported revenues of £60.3m / $117.6m up from 2006: £49.7m / $88.7m, representing year on year growth of 21% (25% before exchange rate movements).

Operating losses (before exceptional items) in 2007 were much reduced at £5.0m / $9.7m (2006: £8.6m / $15.4m) reflecting operating leverage in the business and a number of successful cost saving initiatives. MessageLabs exited the fiscal year trading profitably and reported unaudited interim operating profits of £1.4m / $2.8m on unaudited revenues of £34.2m / $69.3m for the six months ended 31 January 2008.

Cash resources and undrawn banking facilities totalled £18.9m / $38.4m at fiscal year end giving ample resources for the Company’s ongoing growth plan.

Adrian Chamberlain, CEO, commented that “the results demonstrate the continued success of MessageLabs and underpin its position as the leading provider of SaaS messaging security. MessageLabs will continue to grow through new service offerings and expansion into new markets.”

MessageLabs is widely recognized as the leading provider of managed security services to business worldwide based on its revenue, client base and global infrastructure. The company scans web and IM traffic and over billions of business emails each week on behalf of its 18,500 business customers for viruses, spyware, spam, inappropriate images and unwanted content. Experiencing strong growth around the world, MessageLabs now has more than 530 employees in ten countries; United Kingdom, the United States, Australia, Canada, Germany, Belgium, Japan, Hong Kong, Singapore, and the Netherlands.

Conversion to International Accounting Standards
During the year, MessageLabs converted to International Accounting Standards (“IAS”) and also disposed of its sister company, Star. This means that the published results for 2007 only show financial information for MessageLabs.

In addition, some adjustments in respect of the conversion to IAS have also been made to the 2006 numbers, previously reported under UK GAAP. These include a move to expensing as incurred all product development costs (save where IFRS specifically requires otherwise) and the inclusion of part of the preference share capital as a liability on the balance sheet. The accruing preference share dividends, of £2m per annum, are now reported within the Income Statement which has resulted in the recognition of a preference share liability of £23.7m at 31 July 2007. Whilst this is required under IAS, it is the view of the Directors that the liability is likely to be equity settled as opposed to cash settled. Therefore, whilst presented in this way, the preference shares have a minimal impact on the financial position and prospects of MessageLabs.

Improving Financial Performance
MessageLabs continued its strategy of geographic expansion, with relatively new markets such as Germany, Japan and Canada all making material contributions to the overall results. Growth in revenue was strong in each of the three core regions, the US, EMEA and APAC, with APAC recording the fastest growth at 39%. Its growing strength in this region was recently recognised by leading market analysts Frost & Sullivan who estimated MessageLabs market share in Australia at 67%.

A number of non-recurring costs incurred during the period have been reported as exceptional items which mostly consist of non cash items, such as impairment charges. These charges are unlikely to be repeated and warranted separate disclosure within the Income Statement. As such, operating loss before exceptional items is the best reflection of underlying financial performance.

Product Initiatives
MessageLabs also continued to diversify beyond its core email security product portfolio, augmenting its strong position in the emerging Web security SaaS market. MessageLabs remains the only leading vendor with an integrated product suite across Email, Web and IM, based on its own core technology. New offerings to be launched this year include an expanded policy based encryption service and email continuity service, enabling MessageLabs to offer a comprehensive suite of data loss prevention solutions.

A technology leader, MessageLabs currently has ten patents granted with nine pending and continues to make significant investment in research and development. MessageLabs SkepticTM technology, which has proven uniquely successful in stopping threats such as viruses, trojans, spam and phishing attacks across communication channels is now being employed to provide Converged Threat AnalysisTM, an industry first, taking recent threat and reputation information from one messaging protocol, such as email, and applying that knowledge to web traffic and vice versa, providing an unparalleled level of knowledge and protection for MessageLabs customers.

Current Trading & Future Prospects
The current fiscal year has started well with the company exceeding its profitability and cashflow targets for the first half. The step change in operating performance to material profitability creates a solid platform upon which to build. The opportunities in its markets remain strong despite the softer economic climate and as such the prospects for growth, expansion and further shareholder value creation look exciting.



About MessageLabs

MessageLabs is a leading provider of integrated messaging and web security services, with over 19,000 clients ranging from small business to the Fortune 500 located in more than 86 countries. MessageLabs provides a range of managed security services to protect, control, encrypt and archive communications across Email, Web and Instant Messaging.

These services are delivered by MessageLabs globally distributed infrastructure and supported 24/7 by security experts. This provides a convenient and cost-effective solution for managing and reducing risk and providing certainty in the exchange of business information. For more information, please visit www.messagelabs.com.

Media Contacts:

US:
Marissa Vicario, MessageLabs, +1 646 519 8116, mvicario@messagelabs.com,
Hill & Knowlton for MessageLabs, +1 212-885-0552, messagelabs@hillandknowlton.com

EMEA:
Paul Wood, MessageLabs, +44 (0) 1452 627705, pwood@messagelabs.com
Weber Shandwick for MessageLabs, +44 (0) 20 7067 0500, mlukpr@webershandwick.com

APAC:
Andrew Antal, MessageLabs, +61 2 8208 7171, aantal@messagelabs.com
Spectrum Communications for MessageLabs, +61 2 9954 3299, messagelabs@spectrumcomms.com.au