485 Lexington Avenue
New York, New York
10017-5516

212-953-4444(v)
212-972-4502(f)
www.novantas.com

March 15, 2008

2008 Management Letter

We provide advisory and information solutions to improve client performance.

Novantas set out a decade ago to redefine how advisory services and business solutions are delivered to the services industries. The success we have had in doing so is attributable to world class talent in our client organizations and among those who have chosen to become members of our Firm.

The Firm remains distinctive in the industry through our focus on Customer Sciences, which is to say, on strategic and tactical decisions that effect growth in revenue. During the past decade, we have developed exceptionally disciplined and superior approaches to defining, building, managing and measuring revenue-generating capabilities - branding, market mix management, segmentation, product design, pricing, distribution management, sales execution effectiveness, and customer experience. We work with leading clients to develop these customer-focused strategies, and provide strategy implementation and information services to help clients measure and maximize competitive positioning.

During 2007, Novantas again grew substantially in clients served, senior team members, revenues, and net income. We credit this growth to our unwavering commitment to the core principal of client service. We are a client-focused firm, as reflected in our expressed values, our behaviors, our attitudes and our focus.

We believe that earning the respect of demanding clients is the best measure of a firm's success. By that measure, we are exceptionally successful. The Firm continues to solidify its leadership position as consultants to the Financial Services Industries. We continue to be the advisor of choice to top U.S. banks, brokers, and insurers, serving more than eighty institutions in 2007, many continuously for the past five years. We continue to see 85% of our new clients become repeat clients year over year, a remarkable figure for a Firm with a 35% growth rate.

During the past year, Novantas materially increased its services across the payments industry, wealth management, brokerage, and insurance. Our strategy work has supported some of the largest financial industry IPO's, and a number of private equity firms now rely on our due diligence analysis of their financial industries deals.

During 2007 we launched a Research Services business we branded as Novarica. Novarica's initial focus is Insurance Technology. Unlike traditional research companies that require annual subscriptions to published materials and treat access to analysts as an expensive exception, Novarica's core service builds long-term interactive relationships with a teams of experts, and provides access to research reports on demand.

During 2007 we significantly increased the breadth and penetration of our information services offering, and consolidated the services under the Qualytix brand. Today, Qualytix provides information services to financial companies ranging from Demand Elasticity Pricing Systems, to Wallet Modeling, Small Business Prospecting, Call Center Dialogue Optimization, and Competitive Performance Tracking. In just three years, these information services have grown to nearly 30% of our revenue, and we look to continued expansion and market penetration of Qualytix offerings in 2008.

In consulting, we work increasingly at the intersection of industry segments - Traditional insurers extending into banking services; Banks expanding insurance and non-traditional product distribution; Brokers expanding deposit product services. Our work in Payments Networks has permitted us to extend our offerings into Travel Services, where a significant component of the value chain is payments related. Our expertise in Banking has resulted in significant new engagements with Ratings, Data, and Technology clients, themselves seeking to better understand the dynamics of their financial industry customers.

We opened and expanded our Chicago office in 2007. Currently the Firm operates out of offices in New York, Chicago, Toronto and Madrid. In 2008 we anticipate opening a second European office.

Our work with the major industry associations continues to expand, as well as our presence at U.S. business schools. Our partners are on the banking faculty of the Graduate School Programs sponsored by the Bank Administrative Institute and Consumer Bankers Association, at University of Wisconsin and UVA respectively. Other partners are affiliated with teaching programs at Columbia University, Wharton, and Yale.

2007 was a great year for our clients and ourselves, for which we are grateful to clients and employees. We look forward to 2008 with cautious optimism, reflective of the complex and unknown effects of the current economic turmoil. Yet we recognize that our future growth depends upon our continued ability to serve the most capable executives, in the world's most successful institutions, by providing the best talent and service offerings, to solve the toughest problems.

Sincerely,

David G. Kaytes
Managing Director