Northgate Information Solutions Pre-Close Period Statement

During the period Northgate has seen strong organic growth and the benefits of the ARINSO businesses integrated within Northgate’s Human Resources division.

Northgate has continued to build on the progress referred to in the management statement of 11 September 2007, with further growth in its order book and is confident that the growth trends will continue into the second half on the back of orders won and continuing market strength, particularly in the human resources and public services sectors.

Human Resources

The Human Resources division has continued to win a number of significant new contracts, benefiting from Northgate’s increased global footprint following the acquisition of ARINSO.

During the half year these included:

• a £16m, seven year HR outsourcing contract with Pfizer, a global industrial ompany. Under the terms of this contract, ARINSO will provide several housands of employees of Pfizer with outsourced HR services in a number of uropean countries;
• a £14m contract signed with a major European chemical and pharmaceutical roup to provide HR and payroll systems and supporting services to 24,000 mployees across 19 countries;
• a 10 year contract with Agilent to provide HR and payroll systems and
  services to its US employees; and
• a 7 year contract with Cadbury Schweppes to deliver HR systems and related ervices for its confectionery business in 68 countries across 5 continents, ne of the largest global HRO deals ARINSO has signed; and
• a £21m, seven year partnership signed with a major European electrical etailer to outsource their human resources, employee relations and payroll ervices for UK employees and to provide an integrated database across 27 ountries for their European employees on a ResourceLink platform.

In aggregate, the Total Contract Value for all major contract wins in the first half exceeds £120m. We are also at preferred bidder stage for a further £60m which we expect to close shortly.

Northgate are focusing on continuing the successful integration of ARINSO and on driving the business forward. The operating margin of ARINSO has improved from 8.5% to over 9% in the four months since Northgate completed the acquisition in spite of some inevitable disruption during the acquisition and integration period. Going forward we are committed to further margin expansion.

Opportunities to cross sell through both organisations are materialising. Examples include the Northgate team helping to close our transaction with Cadbury Schweppes, and the launch of ResourceLink in the USA in early October.

The Human Resources division has a strong and growing order book and a good pipeline of new deals which we anticipate will result in further growth in the second half of the financial year.

Public Services

The Public Services division has made good progress and the improvement in trading conditions within our Criminal Justice business seen in the first quarter has continued.

The division has a strong order book and promising new business pipeline. During the period we secured contracts with NSW Housing in a deal valued at £8.8m and particularly notable is the growth seen in Northgate’s recently developed Energy Performance Certificates (EPC) business, a web-based on demand service to assist surveyors in providing the energy report required for Home Information Packs.

The business is also making good progress growing its outsourcing activities. In the period a contract has been signed with Wycombe District Council for over £4m for Northgate to deliver hosting and management services.

Managed Services

The Managed Services division has continued to trade well overall with growth in revenues driven by significant education contracts won last year. The performance of the division in the first half is in line with expectations. The division has a good pipeline of orders in the education sector to continue growing the business, although the timescale for closing these deals has extended.

Group Level

Post the ARINSO acquisition, Northgate is now a significantly larger international group which affords greater scope for effective tax planning. Consequently, Northgate currently anticipates an underlying effective tax charge for the group of around 15% for the current year, growing to 26% over the next three years.

The Group’s strong cash flow has continued and is being used to reduce debt and invest in the business. As previously announced, as part of the Arinso transaction, Northgate intends to make a one off contribution to its defined benefit pension scheme of £15m in the second half of the current financial year in support of a restructuring of the schemes to be better aligned with our operating businesses. This will be charged against current pension provisions and has no impact on reported trading results.

As previously disclosed at the time of the ARINSO acquisition, the group expects to incur exceptional costs of £11m for integration and deal costs in this financial year.

Based on the group’s performance to date, the Board expects performance for the year to be in line with expectations.

The group’s interim results are due for release on 10th December 2007.