i-flex Solutions Limited BALANCE SHEET AS AT MARCH 31, 2005 (All amounts in thousands of Indian rupees, unless otherwise stated)

Transcription

1 BALANCE SHEET AS AT MARCH 31, 2005 (All amounts in thousands of Indian rupees, unless otherwise stated) Schedules SOURCES OF FUNDS SHAREHOLDERS' FUNDS Share capital 1 374, ,701 Reserves and surplus 2 10,877,489 9,291,761 11,251,887 9,665,462 APPLICATION OF FUNDS FIXED ASSETS 3 Cost 2,127,784 1,579,584 Less: Accumulated depreciation and amortisation 806, ,332 Net book value 1,321, ,252 Capital work-in-progress and advances 85, ,596 1,407,147 1,031,848 INVESTMENTS 4 425, ,914 DEFERRED TAX ASSET 5 1,208 1,950 CURRENT ASSETS, LOANS AND ADVANCES 6 Sundry debtors 6,200,778 3,957,005 Cash and bank balances 5,393,856 5,275,787 Other current assets 168,947 84,386 Loans and advances 1,673,995 1,266,341 13,437,576 10,583,519 Less: CURRENT LIABILITIES AND PROVISIONS 7 Current liabilities 3,558,597 2,177,746 Provisions 460, ,023 4,019,457 2,499,769 NET CURRENT ASSETS 9,418,119 8,083,750 11,251,887 9,665,462 The schedules referred to above form an integral part of the balance sheet.

2 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2005 (All amounts in thousands of Indian rupees, unless otherwise stated) Schedules Revenues 8 9,028,604 6,844,609 Cost of revenues 9 (4,850,863) (3,245,625) Gross profit 4,177,741 3,598,984 Selling and marketing expenses 10 (468,964) (451,871) General and administrative expenses 11 (1,149,485) (958,403) Depreciation and amortisation net of write-back of opening cumulative effect of accounting change of Rs Nil (March 31, Rs 88,526) (265,944) (35,999) INCOME FROM OPERATIONS 2,293,348 2,152,711 Provision for dimunition in value of investment (71,208) 763 Interest income , ,234 Other expense 13 (15,452) (117,765) INCOME BEFORE PROVISION FOR INCOME TAXES 2,471,107 2,253,943 Provision for income taxes 14 (494,706) (495,076) NET INCOME 1,976,401 1,758,867 Profit and loss account, beginning of the year 443, ,372 Amount available for appropriation 2,419,437 1,988,239 Transfer to General reserve (1,500,000) (1,250,000) Proposed dividend (374,398) (261,644) Corporate dividend tax (52,509) (33,527) Dividend paid on ESOP allotment (32) (32) Corporate dividend tax (4) - Profit and loss account, end of the year 492, ,036 Earnings per share of Rs 5/- each (in Rs.) Basic Diluted Weighted average number of shares used in computing earnings per share 15 Basic 74,782,487 74,668,190 Diluted 77,071,820 77,372,038 The schedules referred to above form an integral part of the balance sheet.

3 STATEMENT OF CASH FLOW FOR THE YEAR ENDED MARCH 31, 2005 (All amounts in thousands of Indian rupees, unless otherwise stated) Cash flows from operating activities Income before provision for income taxes 2,471,107 2,253,943 Adjustments to reconcile income before provision for income taxes to cash provided by operating activities : Depreciation and amortisation 265,944 35,999 (Profit)/Loss on retirement/sale of fixed assets, net (3,947) (971) (Profit)/Loss on sale/conversion of investments (16,804) 72,299 Provision/(Reversal) for diminution in the value of investments, net 71,208 (73,062) Interest income (264,419) (218,234) Effect of exchange difference on cash and bank balances (12,202) (108,889) Finance charge on leased assets 1,218 2,961 Reversal of provision for doubtful advances - (7,253) Provision for doubtful debts 1,395 42,393 3,847 (293,303) 2,513,500 1,960,640 Changes in assets and liabilities Increase in sundry debtors (2,283,715) (1,522,906) Increase in loans and advances (321,410) (31,689) Increase in current liabilities and provisions 1,294,973 (1,310,152) 864,096 (690,499) Cash from operating activities 1,203,348 1,270,141 Receipt of refund of previous assessment years 10,539 30,296 Payment of domestic and foreign income taxes (547,597) (623,933) Net cash from operating activities 666, ,504 Cash flows from investing activities Additions to fixed assets including capital work in progress (384,041) (530,794) Acquisition of Customer Contract from Trigyn Technologies Limited (106,811) - Acquisition of IPR from SRA Systems Limited (39,672) - Acquisition of IPR from Trivium Technologies Limited (47,138) - Investment in ISP Internet Mauritius Company (192,115) - Investment in Login SA (6,593) Proceeds from sale of fixed assets 11, Loan to i-flex America Inc - (439,200) Bank fixed deposits having maturity of more than 90 days matured during the 2,877,613 2,910,000 year Bank fixed deposits having maturity of more than 90 days booked during the (4,238,540) (2,877,613) year Share Application money paid to i-flex America inc. - (91,160) Proceeds from maturity of JM High Liquidity Fund 266, Interest received 218, ,625 Net cash (used in) investing activities (1,640,416) (812,476) Cash flows from financing activities Issue of shares against ESOP Scheme 36,968 29,593 Advance towards grant of options to IBM 5,367 - Advance against equity shares to be issued under ESOP Scheme 6,546 - Repayment of loan from Employee Stock Purchase Scheme ('ESPS') Trust 67,000 78,501 Loan to subsidiaries (91,558) Payment of dividend and tax thereon (295,167) (105,242) Payment for lease obligations (9,949) (8,077) Net cash provided by financing activities (280,793) (5,225) Effect of exchange difference on cash and bank balances 12, ,889

4 Net decrease in cash and cash equivalents (1,242,717) (32,308) Cash and cash equivalents at beginning of the year 2,395,932 2,428,240 Cash and cash equivalents at end of the year (Note 1) 1,153,215 2,395,932 Note 1 : Cash in hand Balances with scheduled banks: -Current accounts in foreign currency 320,754 1,185,988 -Deposit accounts 4,064,209 2,997,554 -Deposit amount of unutilised IPO funds 835, ,233 -Margin money deposit 121, ,330 -Other current accounts 49,830 38,790 -Unclaimed dividend accounts 2,101 2,242 Balances with non-scheduled banks: - - -Current accounts in foreign currency Total Cash and Bank Balance 5,393,856 5,275,787 Less: Bank deposits having maturity of more than 90 days (4,238,540) (2,877,613) Unclaimed dividend accounts (2,101) (2,242) Cash and cash equivalents at the end of the year 1,153,215 2,395,932

5 SCHEDULE 1: SHARE CAPITAL Authorised : 100,000,000 equity shares of Rs 5/- each (March 31, ,000,000 equity shares) 500, ,000 Issued, subscribed and paid-up : 74,879,650 equity shares of Rs 5/- each, fully paid up (March 31, ,740,150 equity shares) 374, ,701 (a) Of the above, 62,121,800 equity shares of Rs 5/- each had been issued as fully paid up bonus shares by capitalising the securities premium account. (b) (c) During the year ended March 31, 2005, the Company allotted 139,500 shares (March 31, ,250 shares) to its employees who exercised their options under the ESOP scheme. In Annual General Meeting of the Company held on August 19, 2004, the shareholders have approved a resolution to issue up to 98,000 options, representing 0.13% of paid up capital of the Company to IBM Global Services India Pvt. Ltd. (IBM). The Board of Directors of the Company at their meeting held on September 1, 2004, allotted 91,347 options to IBM at a price of Rs determined in accordance with the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 ("the SEBI Guidelines"). These options are convertible at a future date into equal number of equity shares of face value of Rs 5/- each. IBM is entitled to subscribe to these options in two tranches over a period of 13 to 18 months from the date of issue of options subject to the completion of predetermined conditions. As required by SEBI guidelines, IBM has deposited Rs million, an amount equivalent to 10% of total consideration. SCHEDULE 2: RESERVES AND SURPLUS Securities premium Balance, beginning of year 2,110,156 2,267,687 Received during the year 36,270 29,157 Capitalized towards issue of bonus shares - (186,688) Balance, end of year 2,146,426 2,110,156 General reserve Balance, beginning of year 6,738,569 5,488,569 Transferred from profit and loss account 1,500,000 1,250,000 Balance, end of the year 8,238,569 6,738,569 Profit and loss account 492, ,036 10,877,489 9,291,761 (THIS SPACE IS INTENTIONALLY LEFT BLANK)

6 SCHEDULE 3: FIXED ASSETS Particulars Additions during the year Gross Block Sale/deletions for the year Depreciation/amortization For the year On Sale/deletions for the year Net Book Value Land 232, , , ,674 Improvement to leasehold premises 84,309 28,550 40,314 72,545 54,394 9,933 31,934 32,393 40,152 29,915 Buildings (See Note 1) 229,408 19, ,267 4,919 11,916-16, , ,489 Computer equipments 531, ,739 1, , , ,901 1, , , ,766 Electricals and office equipments 237,862 69,861 57, ,034 96,676 36,060 48,335 84, , ,186 Furniture and fixtures 233,286 47,391 37, ,757 76,264 35,990 29,896 82, , ,022 Leased Vehicles 30,686 18,799 12,305 37,180 15,486 7,710 9,655 13,541 23,639 15,200 Intangible Assets: Goodwill on acquisition - 168, ,817-35,227-35, ,590 - Customer contract - 21,798-21,798-16,350-16,350 5,448 - Product IPR - 110, ,816-8,857-8, ,959 - TOTAL 1,579, , ,430 2,127, , , , ,255 1,321, , , ,635 13,803 1,579, , ,525 13, ,332 Capital work-in-progress and advances 85, ,596 1,407,147 1,031,848 Note: 1. Includes 10 (March 31, ) shares of Rs.50/- each in Takshila Building No.9, Co-op Housing Society Ltd., Mumbai.

7 SCHEDULE 4: INVESTMENTS a) Long term investments (i) Trade (unquoted) EBZ Online Private Limited (Note a) 45,000 45, ,240 equity shares of Rs.10/- each, fully paid-up (March 31, ,240) Less : Provision for diminution in value of investment (45,000) ,000 Flexcel International Private Limited (Note b) 20,680 20,680 2,068,000 equity shares of Rs 10/- each, fully paid-up (March 31, ,068,000) Less : Provision for diminution in value of investment (20,680) ,680 (ii) Other than trade investments (unquoted) Eastern Software Systems Limited (Note a) 7,406 7, ,283 equity shares of Rs.10/- each, fully paid-up (March 31, ,283) Less : Provision for diminution in value of investment (5,528) - 1,878 7, % KEONICS Mahithi Bonds Series-1 (Note c) 20,000 20, Bonds of Rs. 50,000/- each, fully paid (March 31, ) National Savings Certificate - VIII issue JM High Liquidity Fund - Serial Plan 2004 (Growth) (Note d) - 250,000 March 31, ,965,796 (and 858 fractions) units of Rs 10/- each Login SA (Note j) 6,593-33,000 equity shares of Euro 2/- each fully paid up (March 31, Nil) (iii) Other than trade investments (quoted) 6.75% Tax Free US-64 Bonds (Note e) 33,123 33, ,225 Bonds of Rs 100/- each, fully paid (March 31, ,225) (iv) In subsidiaries (unquoted) i-flex solutions b.v. (Note f) 25,119 25,119 a wholly owned subsidiary company incorporated in The Netherlands 5,185 equity shares of Euro 100/- each, fully paid-up (March 31, ,185) i-flex solutions pte limited (Note g) 6,626 6,626 a wholly owned subsidiary company incorporated in Singapore 250,000 equity shares of Singapore $ 1/- each fully paid up (March 31, ,000) i-flex America inc. (Note h) 139, ,829 a wholly owned subsidiary company incorporated in the United States of America 1 equity share of US$ 0.01/- each fully paid up (March 31, ) ISP Internet Mauritius Company (Note i) 192,115 - a wholly owned subsidiary company incorporated in the Republic of Mauritius 30,000 equity shares of US$ 1/- each fully paid up (March 31, Nil) 425, ,914

8 Aggregate cost of quoted investments 33,123 33,123 Aggregate market value of quoted investments 34,613 35,898 Aggregate amount of unquoted investments 392, ,791 Note a The Company s ownership interest in Eastern Software Systems Limited ('ESSL') is 6.62%. The Company also holds 19.5% shares in EBZ Online Private Limited ('EBZ'). EBZ is a strategic partnership between Brihans Technologies Private Limited ('BTPL') and i-flex to integrate the selected and adapted software provided under i-flex s products with BTPL s products for co-operative banking sector in India. ESSL is primarily engaged in catering to the needs of small businesses through its flagship product, ebizframe. Both companies are unlisted companies. The Company's rights are limited to protecting its investments in ESSL and EBZ and it does not exert significant influence on the operations of these companies by way of representation on the board of directors, participation in policy making processes, material intercompany personnel or technological dependency. Accordingly, these investments are stated at cost less any decline in fair value below original cost when considered to be other than temporary. Management is of the view that the fair value of its investment in ESSL and EBZ has declined permanently. Hence, management has made a provision of Rs. 45 million towards diminution in the value of its investment in EBZ and Rs million towards partial diminution in the value of its investment in ESSL. Note b Flexcel is a 40:40:20 joint venture between i-flex, HDFC Bank Limited and its group companies and Lord Krishna Bank, which provides the capability of FLEXCUBE through an Application Service Provider ( ASP ) model to various banks and financial institutions in India who may not wish to invest in creating and maintaining their own internal IT infrastructure. As per the unaudited financial statements as at March 31, 2005, Flexcel had incurred accumulated losses of Rs million. Management is of the view that the fair value of its investment in Flexcel has declined permanently. Hence, considering the uncertainty about the future profitability of Flexcel, management has made a provision of Rs million towards diminution in the value of its aggregate investment in Flexcel. Note c Investments in debt securities of 12.75% KEONICS Mahithi Bonds Series -1 allotted on February 1, 2001 are redeemable at par at the end of seven years from the date of allotment and have a put and call option at the end of five years from the date of allotment. Note d Investment in JM High Liquidity Fund - Serial Plan 2004 (Growth) was an investment in debt instrument funds. Consideration amounting to Rs. 266,804 was received on maturity of the fund in April Note e On June 1, 2003 units in UTI US-64 were converted into 6.75 % Tax free US-64 bonds.the first 5,000 units were converted at the repurchase price of Rs 12/- each and the balance 3,306, units at Rs 10/- each. These bonds are redeemable at par on June 1, Note f i-flex b.v. was incorporated as a 100% subsidiary in The Netherlands to undertake marketing of the Company's software products and information technology services to clients in Europe and work on the business development efforts in the region. As per the unaudited financial statements, i-flex b.v. has profit of Euro 1.62 million (approximately Rs million) during the year ended March 31, 2005 and accumulated losses of Euro 1.20 million (approximately Rs million). Management considers that there is no permanent diminution in the value of its investment in i-flex b.v. and hence it is stated at cost. Note g i-flex pte. was incorporated as a 100% subsidiary in Singapore to undertake marketing of the Company's software products and provide software and related services to clients in Asia Pacific region and work on the business development efforts in the region. As per the unaudited financial statements as at March 31, 2005 i-flex pte. has a net profit of SGD 4.75 million (approximately Rs million) for the year ended March 31, 2005 and an accumulated profit of SGD 6.87 million (approximately Rs million) and it is stated at cost. Note h In December 2003, i-flex America inc., a Delaware based company, was incorporated as a 100% subsidiary in the United States of America to hold the investments of the Company in various ventures/companies in the United States of America. As per the unaudited consolidated financial statements, i-flex America inc. has a net profit of US$ 3.13 million (approximately Rs million) during the year ended March 31, The accumulated profits as per the unaudited financial statements as at March 31, 2005 is of US$ 2.55 million (approximately Rs million). Note i Effective December 31, 2004, i-flex Solutions Ltd ( i-flex ) acquired all of the shares in ISP Internet Mauritius Company ('ISP'), a corporation organized under the laws of the Republic of Mauritius. ISP holds all the shares in Equinox Corporation, a Delaware corporation ( Equinox US ), and in Equinox Global Services Pvt. Limited, a corporation organized under the laws of India ( Equinox India ). Equinox India and Equinox US are engaged in providing business process outsourcing services to the mortgage banking industry. The acquisition was carried out in two stages, where the Company acquired a 84 per cent stake for a consideration of $4.35 million, and also repaid a debt of ISP aggregating USD 0.95 million, through a loan to ISP. The Company also entered into separate agreements with the other three shareholders to acquire the balance 16 per cent stake. The consideration for this 16 per cent stake is linked to the profit of the ISP business over the next three fiscal years and is payable based on a pre-determined formula. Note j In January, 2005, i-flex Solutions Ltd ( i-flex ) acquired 33% equity stake in a France based treasury software specialists firm, Login SA from its existing shareholders for Euro 66,000. Login SA is a highly specialised front and mid office treasury solution provider with its product Login Acumen. The share purchase agreement was signed on November 15, 2004 between the parties. However, the arrangement closed only on January 7, 2005, post receipt of the requisite regulatory approvals.

9 SCHEDULE 5: DEFERRED TAX ASSET Difference between book and tax depreciation 1,208 1,950 SCHEDULE 6: CURRENT ASSETS, LOANS AND ADVANCES (a) Sundry debtors (unsecured) Debts outstanding for a period exceeding six months: -Considered good 2,256,382 1,264,795 -Considered doubtful 31,735 30,582 2,288,117 1,295,377 Other debts - considered good 3,944,396 2,692,210 6,232,513 3,987,587 Less: Provision for doubtful debts (31,735) (30,582) 6,200,778 3,957,005 Amount due from subsidiaries 5,163,221 2,973,860 (b) Cash and bank balances Cash in hand Balances with scheduled banks: -Current accounts in foreign currency 320,754 1,185,988 -Deposit accounts 4,064,209 2,997,554 -Deposit amount of unutilised IPO funds 835, ,233 -Margin money deposit 121, ,330 -Other current accounts 49,830 38,790 -Unclaimed dividend accounts 2,101 2,242 Balances with non-scheduled banks: -Current accounts in foreign currency ,393,856 5,275,787 Balances with non-scheduled banks Citibank, Dubai Maximum balance held during the year: Citibank NY, USA - 1,423 Citibank, Dubai 1, (c) Other current assets Interest accrued on : -Bank deposits 57,752 22,215 -Bonds 1,202 1,208 -Loan to subsidiary 12,059 1,818 Unbilled debtors 97,934 59, ,947 84,386

10 (d) Loans and advances (unsecured, considered good unless otherwise stated) Advances recoverable in cash or in kind or for value to be received: Loan to ESPS Trust 122, ,425 Loans to employees (secured) 1,922 7,694 Loan to subsidiaries 529, ,200 Premises and other deposits 597, ,495 Prepaid expenses 119,221 79,701 Advance tax, net of provision for taxes 108,067 65,662 Other advances 195,708 82,164 1,673,995 1,266,341 SCHEDULE 7: CURRENT LIABILITIES AND PROVISIONS (a) Current liabilities Amount due to subsidiaries 2,003,727 1,120,061 Accrued expenses 683, ,237 Deferred revenues 622, ,680 Accounts payable 73,421 87,824 Employee related liabilities 14,338 7,691 Advances from customers 14,480 9,118 Finance lease obligations 25,202 17,189 Advance against Options granted to IBM (Refer Note (c) of Schedule 1) 5,367 - Investor Education and Protection Fund to be credited by unclaimed dividends* 2,101 2,242 Advance against equity shares to be issued under the ESOP scheme 6,546 - Deferred forward exchange contracts 37,831 5,316 Other current liabilities 68,875 19,388 3,558,597 2,177,746 * There is no amount due and outstanding as at balance sheet date to be credited to the Investor Education and Protection Fund. (b) Provisions Proposed dividend 374, ,644 Corporate dividend tax 52,509 33,523 Provision for leave encashment 33,953 26, , ,023

11 SCHEDULE 8: REVENUES Product licenses and related activities 5,163,846 4,364,845 IT solutions and consulting services 3,864,758 2,479,764 9,028,604 6,844,609 SCHEDULE 9: COST OF REVENUES Employee costs 3,367,083 2,109,318 Travel related expenses (net of recoveries) 1,008, ,737 Application software 165, ,667 Professional fees 309, ,577 Contract acquistion cost - 5,326 4,850,863 3,245,625 SCHEDULE 10: SELLING AND MARKETING EXPENSES Employee costs 170, ,162 Travelling expenses 98, ,432 Professional fees 90, ,538 Advertising expenses 33,014 34,631 Communication expenses 8,961 8,901 Miscellaneous expenses 67,470 50, , ,871 SCHEDULE 11: GENERAL AND ADMINISTRATIVE EXPENSES Employee costs 417, ,251 Rent 97, ,807 Communication expenses 88,360 99,210 Application software 72,188 - Professional fees 111,215 59,135 Dispute settlement expenses - 40,000 Bad debts written off - 34,553 Power 63,447 44,758 Travelling expenses 40,192 36,018 Rates and taxes 10,370 14,516 Miscellaneous expenses 249, ,155 1,149, ,403 SCHEDULE 12: INTEREST INCOME Interest on: -Bank deposits 248, ,293 [includes tax deducted at source of Rs 44,376 (March 31, Rs 37,547)] -Bonds 4,812 4,606 [includes tax deducted at source of Rs 533 (March 31, Rs. 561)] -Loans to employees 384 1,066 -Loan to subsidiaries 10,417 2,209 -Income tax refunds 653 5, , ,234

12 SCHEDULE 13: OTHER INCOME/(EXPENSE) Foreign exchange loss, net (41,827) (154,126) Profit on retirement/sale of fixed assets, net 3, Reversal of provision for doubtful advance - 7,253 Advances written back - 26,352 Profit on sale of investment 16,804 - Miscelleneous income 5,624 1,785 (15,452) (117,765) SCHEDULE 14: PROVISION FOR TAXATION Current Taxes - Domestic taxes 442, ,926 - Foreign taxes 51,105 27,654 Deferred tax net of opening cumululative effect of Rs Nil (March 31, ,410) , , ,076 Under the Indian Income-tax Act 1961, for the year ended March 31, 2005 the Company is, under Section 10A of the Income Tax Act, 1961, eligible to claim benefits with respect to 100% during the year, of the profits earned from export revenues from six of its seven units registered under the Software Technology Park ('STP'). Foreign taxes represents income taxes payable overseas by the Company in the United States of America, Kuwait,Singapore, Canada, Japan and Poland. SCHEDULE 15: RECONCILIATION OF BASIC AND DILUTED SHARES USED IN COMPUTING EARNING PER SHARE No. of shares Weighted average shares outstanding for Basic EPS 74,782,487 74,668,190 Add: Effect of dilutive stock options 2,289,333 2,703,848 Weighted average shares outstanding for Diluted EPS 77,071,820 77,372,038 (THIS SPACE IS INTENTIONALLY LEFT BLANK)

13 for the year ended March 31, 2005 SEGMENT INFORMATION Business segments are defined as a distinguishable component of an enterprise that is engaged in providing a group of related products or services and that is subject to differing risks and returns and about which separate financial information is available. This information is reviewed and evaluated regularly by the management in deciding how to allocate resources and in assessing the performance. The Company is organised geographically and by business segment. For management purposes the Company is primarily organised on a worldwide basis into two business segments: a) Product licenses and related activities ('Products') and b) IT solutions and consulting services ('Services'). The business segments are the basis on which the Company reports its primary segment information to management. Product licenses and related activities segment deals with banking software products like the FLEXCUBE suite of products, Reveleus and Microbanker which cater to needs of corporate, retail and investment banking as well as treasury operations and data warehousing requirements. The related activities include enhancements, implementation and maintenance activities. IT solutions and consulting services comprise of bespoke software development, provision of computer software solutions and related consulting services arising from such activities. This segment is further sub-divided in the following sub-segments i.e. Business intelligence, Customer relationship management, Brokerage, e-commerce, Internet services and IT and Business consulting. The Company does not track assets and liabilities geographically. March 31, 2005 Particulars Products Services Corporate Total Revenues 5,163,846 3,864,758-9,028,604 Cost of revenues (1,817,276) (3,033,587) - (4,850,863) Gross profit 3,346, ,171-4,177,741 Selling and marketing expenses (441,828) (27,136) - (468,964) General and administrative expenses (264,265) (225,804) (659,416) (1,149,485) Depreciation and amortisation (81,787) (121,374) (62,783) (265,944) Income from operations 2,558, ,857 (722,199) 2,293,348 Provision for dimunition in value of investment (71,208) Interest income 264,419 Other income/(expense) (15,452) Income before provision for income taxes 2,471,107 Provision for income taxes (494,706) Net profit 1,976,401 Other information Segment assets 3,216,594 4,826,550 7,228,200 15,271,344 Segment liabilities 919, ,583 2,783,508 4,019,458 Share capital and reserves and surplus ,877,489 10,877,489 Capital expenditure by segment 195, , , ,630 (THIS SPACE IS INTENTIONALLY LEFT BLANK)

14 for the year ended March 31, 2005 March 31, 2004 Particulars Products Services Corporate Total Revenues 4,364,845 2,479,764-6,844,609 Cost of revenues (1,325,193) (1,920,432) - (3,245,625) Gross profit 3,039, ,332-3,598,984 Selling and marketing expenses (420,696) (31,175) - (451,871) General and administrative expenses (339,525) (237,256) (381,622) (958,403) Depreciation and amortisation (49,286) (61,765) 75,052 (35,999) Income from operations 2,230, ,136 (306,570) 2,152,711 Reversal for dimunition in value of investment, net 73,062 Loss on sale/conversion of investment (72,299) Interest income 218,234 Other income/(expense) (117,765) Income before provision for income taxes 2,253,943 Provision for income taxes (495,076) Net profit 1,758,867 March 31, 2004 Segment assets 2,554,069 2,518,740 7,092,422 12,165,231 Segment liabilities 569, ,126 1,752,080 2,499,769 Share capital and reserves and surplus - - 9,665,462 9,665,462 Capital expenditure by segment 477,000 30, , ,635 Segment revenue and expense: Revenue is generated through licensing of software products as well as by providing software solutions to the customers including consulting services. The expenses which are not directly attributable to a business segment are shown as corporate expenses. Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist principally of debtors, deposits for premises and fixed assets, net of allowances. Segment liabilities primarily includes deferred revenues, finance lease obligation, advance from customer, accrued employee cost and other current liabilities. While most such assets and liabilities can be directly attributed to individual segments, the carrying amount of certain assets and liabilities used jointly by two or more segments is allocated to the segment on a reasonable basis. Assets and liabilities that cannot be allocated between the segments are shown as part of corporate assets. Geographical segments The following table shows the distribution of the Company's sales by geographical market : Regions Amount % Amount % United States of America 4,026,328 45% 2,894,315 43% Europe 1,875,670 21% 1,344,314 19% Asia Pacific 1,372,126 15% 1,206,155 18% Middle East and Africa 1,592,145 17% 1,275,351 18% Latin America and Carribean 162,335 2% 124,474 2% 9,028, % 6,844, % (THIS SPACE IS INTENTIONALLY LEFT BLANK)