Northgate-is - News Item 1022

Northgate Information Solutions - 6 months trading update May-October 2009

I am pleased to report that, despite some very unfavourable conditions in some of our markets, the Northgate Information Solutions group of businesses has performed well in the first six months of the current financial year.

In these turbulent times we are fortunate to have a stable business on which to build, and the resilience of our core offerings in the Human Resources and Public Services markets has allowed us to continue to make progress in all parts of our business. This stability has been reinforced by the commitment of our majority shareholder, KKR, whose support has allowed us to take advantage of favourable market conditions for acquisitions, and add some scale to our businesses through further bolt-on deals.

NorthgateArinso, our global HR systems and services business, continued its journey towards market leadership. It was pleasing to see a growing number of new name clients recognising the benefits to them from the investments that we continue to make in our application portfolio, both in stand-alone software sales and in our IP led outsourcing model. In the period we won several multi-country HR BPO contracts, amongst them the single largest contract that we have ever won in any one of our businesses. This progress in our BPO business and solid performance in our Software business allowed us to grow our NorthgateArinso business overall, despite some contraction of our Systems Integration business in a weak market. Overall, we saw a strong profit performance, increasing our profit margins in the division, and a significant gain in market share with NorthgateArinso outperforming many of its peers.

Northgate Public Services, the UK market leader in the local authority and public safety software markets, has enjoyed another record period of sales and profits. We closed our largest ever software deal in this business, and we closed out the six months with a record contracted order book. At the same time, we were able to build a major pipeline for our transformational service deals in local government, and the first ever prospect for this type of multi-year project in the police sector.

Northgate Managed Services traded significantly ahead of our expectations in the period as we were successful in implementing our Education contracts ahead of schedule, allowing us to move to the managed services portion of these contracts earlier than expected. We also enjoyed a good period of new contract signings and renewals, with particularly good news in the re-signing of our contract with Viridian in Northern Ireland, and the addition of a number of new name long term service clients. Consequently, this business also exited the period with a record forward order book.

Overall, the average number of people employed by the group has grown slightly from approximately 7850 to just over 7900 in the period.

We have mentioned before the resilience of the products and services that we offer our clients, from payroll management to council tax administration, emergency call handling to running ICT infrastructure for schools, and from administering benefits payments to processing penalty notices. In this year more than ever we have seen the benefits of this resilience in our ability to continue to grow our business in very difficult market conditions. We help our clients with essential, mission critical activities. We are therefore confident that we are well placed to deal with the difficult times ahead.

I would like to take this opportunity to thank all of our employees for their continued dedication and outstanding work. Above all I would like to thank our clients for continuing to trust us with such important work on their behalf. We are grateful for the opportunity to serve them, and look forward to serving them in the years ahead.

Chris Stone
Group Chief Executive