i-flex posts a 53% growth in Q1 revenue (YOY) and 51% growth in Q1 net profit (YOY) Product software accounts for 67% of Q1 revenue

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1 For immediate release i-flex posts a 53% growth in Q1 revenue (YOY) and 51% growth in Q1 net profit (YOY) Product software accounts for 67% of Q1 revenue Quarter ending 30 June 2002 Results at a glance Unaudited Indian GAAP (YOY growth) Sales: Rs. 1, million (up 53 %) Profit Before Tax: Rs million (up 51 %) Net Profit: Rs million (up 51 %) EPS (Basic and Diluted) for the Q: Rs (up 47 %) Highlights of the quarter Acquired 12 new customers during the quarter ended June 30, Total customers serviced goes up to 356 across 85 countries. Acquired 6 new customers for FLEXCUBE. Revenues from United States of America were 30%; Middle East and Africa were 26%, Asia Pacific were 24%, Europe were 19% and Latin America were 1% during this quarter. Successfully penetrated the German market with a new win with DGZ Deka Bank. Augmented sales and marketing operations with the opening of two new branch offices in London, UK and Frankfurt, Germany as part of the European expansion plans. Successful foray into Egyptian market with large client wins, sets up avenues into Arabic Markets. Corporate Business Partner network expanded to cover a footprint of 58 countries up from 50 countries at the end of previous quarter. i-flex ranked the No. 1 product company by NASSCOM in its Annual Software Industry Survey Report. Added 103 new employees, of which 71 are laterals, during the quarter taking the total staff strength to 2,083 as of June 30, Implemented the HR Management System PeopleSoft for efficient management of human capital and better automation of HR systems enterprise wide. Work on the i-flex Park project at Bangalore progressing on schedule. First building slab completed. 1

2 July 30, 2002: The Board of Directors of i-flex solutions limited, a provider of comprehensive Information Technology Solutions to the financial services industry worldwide, today adopted the first quarter results for the period ended June 30, i-flex posted a top line growth of 53.42% with revenue at Rs. 1, million for the period ended June 30,2002, as compared to Rs million for the corresponding period in Commenting on the results, Rajesh Hukku, Chairman and Managing Director, i-flex solutions said, The first quarter of fiscal 2002 has been vibrant for the company. Despite the tough market conditions, we are on target in terms of growth plans and have made significant forays into the North American and European markets with our winning portfolio of products and services. We have also successfully completed our IPO process amidst challenging market conditions and the overwhelming response reflects investor confidence in our business model. According to R. Ravisankar, CEO - International Operations and Technology, "The numbers reflect the success of our growth strategy focus on the financial services vertical segment, growing our portfolio of solutions, entering new markets, and deepening penetration of existing markets. This, together with our strong risk mitigation through portfolio and global market diversification, adds up to a robust business model that combines growth with stability. Said Deepak Ghaisas CEO India Operations and CFO, i-flex solutions, Our growth underscores the importance of our product business model. Our balance sheet is going from strength to strength on multiple parameters. The net cash inflow has shown an impressive growth, so has the growth in EPS in spite of the adverse market conditions. Financial Performance The Revenues for the quarter ended June 30, 2002 were Rs. 1, million, a growth of 53% over Rs million recorded over the corresponding quarter of the previous year. The Net Income for the quarter ended June 30, 2002 was Rs million, a growth of 51% over Rs million over the corresponding quarter of the previous year. Earnings per share stood at Rs per share for the quarter ended June 30, 2002 representing a growth of 47% over the earnings per share of Rs.8.81 for the corresponding quarter of the previous year. Products revenues represented 67% of the total revenues and IT solutions and software services comprised 33% of the revenues as on June 30, FLEXCUBE continues to contribute 98% of the product revenues during the quarter ended June 30, The products revenues showed an increase of 75% to Rs million during the quarter. The revenues from the IT software solutions and services division increased 23% this quarter to Rs million from Rs million. 2

3 The basic and diluted EPS for the quarter at Rs was up 47% compared to Rs for the corresponding period ended June 30, Liquidity and capital expenditure Cash and cash equivalents increased by Rs. 3, million during the quarter to Rs. 4, million, up from Rs. 1, million in the corresponding quarter of the previous year. This was after incurring a capital expenditure of Rs million. Net operating cash flows for the quarter ended June 30, 2002 were Rs million. Key Business Highlights Signing of DGZ-Dekabank, Germany i-flex won an order from DGZ-Dekabank, Germany s tenth largest bank and largest mutual fund company, for its FLEXCUBE Investor Services product. The win strengthens i-flex s leadership in the region by marking the company s 28th FLEXCUBE customer win in Europe. FLEXCUBE live at NikkoCiti Trust and Banking Corporation, Japan FLEXCUBE went live at the NikkoCiti Trust and Banking Corporation. NikkoCititrust, with 7 trillion Yen of customer assets under administration and custody, together with bond agency, foreign exchange and other banking services, is one of Japan s largest financial institutions. Signing on NDB Bank, Sri Lanka NDB Bank, Colombo, one of the largest financial institutions in Sri Lanka, signed on i-flex solutions as its banking solutions provider. The bank commenced operations in October 2001 with its acquisition of ABN AMRO Bank NV Sri Lanka. Rabobank Paris goes live on FLEXCUBE Rabobank International, one of the acclaimed financial institutions in Europe has implemented FLEXCUBE as a core banking solution for its operations in France. FLEXCUBE Investor Services live at African Banking Corporation, Zimbabwe FLEXCUBE Investor Services went live at the African Banking Corporation, Zimbabwe in a record 3-month. The Bank has automated its unit trust operations using FLEXCUBE Investor Services. The bank also expanded the relationship by signing up for the FLEXCUBE Information Center, i-flex s state of art business intelligence solution. 3

4 Services Business The Company s services revenues from US were 51%, Middle East were 7%, Asia Pacific were 24%, and 18% came from Europe. During the quarter, i-flex's Services Division completed several landmark projects for its customers worldwide. Notable among them were: Implementation of a large data warehouse in the Latin American region. Puerto Rico was the first country to go live with five others in the pipeline. Large and complex upgradation of 21 warehouses covering 18 countries, which involved 10 Terabytes of data and nine different software applications. Enterprise Application Integration project for a large bank in Malaysia. Involved integration of disparate host applications resulting out of merger to offer uniform customer experience and easy manageability. Execution of a Risk Management System covering six countries (Hong Kong, Malaysia, India, Hungary, Slovakia and the Czech Republic) entailing simultaneous user acceptance testing made possible with elaborate configuration management. Completed high profile consulting assignments to a host of FLEXCUBE customers reinforcing success of the cross sell strategy. Citigroup services engagement has further expanded by addition of three new relationships. Awards and Achievements NASSCOM has ranked i-flex solutions limited as the No.1 Indian Product Company in its annual Software and Services Industry Performance report for the financial year In NASSCOM s first-ever comprehensive survey of over 2,800 Indian software and service companies, i-flex solutions also moved up in the list of Top 20 Indian Software Exporters to 13 th position from 18 th position last year. The Ministry of IT has awarded i-flex solutions for Excellence in Exports instituted by the Electronics and Software Council (ESC). In recognition of our endeavor to maintain transparency and provide excellent reporting, our annual report has won two national and international awards. Operations i-flex opened new branch offices in Frankfurt, Germany and London, UK. Germany and UK are considered important markets for the company s European operations. Work on i-flex Park, the proposed 144,000 square foot office block being constructed in Bangalore is progressing smoothly and on schedule. The first slab has been completed. 4

5 About i-flex solutions limited i-flex solutions limited (Reuters: IFLX.BO & IFLX.NS) is a provider of end-to-end information technology solutions to the financial services industry worldwide through a comprehensive range of products and customized service offerings. i-flex enables financial institutions through its to cut costs, respond rapidly to market needs, enhance customer service levels, and mitigate risk, through its suite of proven products and services. i-flex s portfolio of offerings comprise the FLEXCUBE product suite for consumer, corporate, investment and internet banking, asset management, and investor servicing; custom application software development and deployment, maintenance and support services (both onsite and offshore) and business and IT consulting. i-flex has provided IT solutions and services to more than 350 customers in over 80 countries. i-flex s flagship product, FLEXCUBE is the choice of more than 115 customers worldwide. FLEXCUBE has been ranked among the world s top-two largest selling wholesale back-office banking systems in International Banking Systems (IBS) UK Sales League Tables for 1999, 2000 and FLEXCUBE first achieved this ranking in 1999 within two years of its launch. FLEXCUBE has also been ranked among the top-two retail back office banking systems by the London based Retail Banking Systems (RBS) for The FLEXCUBE suite includes: FLEXCUBE, a banking back office and transaction processing system, a multi channel e-finance platform that delivers services over the Internet and FLEXCUBE Information Center, a Business Intelligence solution with a set of specialized analytical applications. i-flex also offers financial institutions customized solutions through its domain and technology Centers of Excellence, which encompass areas such as Business Intelligence, CRM, Development & Integration Services, e-services and Payment Systems. Supported by a mature, quality led process assessed at SEI CMM Level 5, i- flex draws on its rich functional and technology expertise to offer services to customers in the financial services world. i-flex Consulting, the consulting arm, offers Strategic and Business consulting to customers in the financial services industry. With more than 2000 employees and eight development centers in India, i-flex has been ranked as the largest product company in India and among the 15 largest software exporters in India (Source-NASSCOM Software and Service Industry Performance Report ). The company is also ranked among the top 15 Indian Software & Services Exporters by Dataquest India for (Source DQ Top 20, survey). 5

6 i-flex has a strong global reach, with sales, marketing and support presence covering over 16 overseas locations including 3 subsidiaries (i-flex solutions inc. in the US, i- flex solutions b.v in the Netherlands, and i-flex solutions pte. ltd. in Singapore). In addition, i-flex is represented in over 58 countries through more than 31 corporate business partners. i-flex also has strong alliance and implementation relationships with industry leaders including Accenture, HP, IBM, Intel, Microsoft, Oracle, and Sun Microsystems. Safe Harbor Provision Certain statements in this release concerning our future growth prospects are forwardlooking statements which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT products and services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which i-flex has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. FOR MORE INFORMATION PLEASE CONTACT Sunil Robert, Manager- Corporate Relations, i-flex solutions limited at ext sunil.robert@iflexsolutions.com Percy Dubash, Adfactors PR at Tel: percy@adfactorspr.com Parvez Ahmad, Asst. Manager, Corporate Communications, i-flex solutions limited at ext parvez.ahmad@iflexsolutions.com 6