25 January 2006

Q3 Trading Update - Strong Margins Support Profit

Endace Limited (the "Company" or "Endace") (AIM : EDA), a world leader in the acceleration of network security and analysis applications, today announced that during the three months to 31 December, 2005 it was able to increase its gross margins. This supports the Board's full year expectations, mindful of the fact that quarterly sales are weighted towards the end of each quarter and the Group has historically earned a high percentage of annual revenue in the last quarter of the financial year.

Commenting on the Company's trading during the third quarter, Endace CEO Selwyn Pellett said, "Our ability over the past three months to lift the average selling price, while improving yields and reducing costs from our suppliers, has been pleasing. Revenues were marginally below our original expectations for the quarter, but an increase in the margins achieved, and careful control of operating costs, have delivered an increase in expected year to date pre tax profit. With new management appointed and high-value product launches established, Endace is strongly positioned to take advantage of the growing size and demands of its network security customers."