SUBX.L Regulatory News (SUBX)

SUBEX LTD

Registered office: Adarsh Tech Park, Outer Ring Road, Devarabisanahalli, Bangalore - 560 037

Statement of Consolidated Unaudited Results for the Quarter and Six months Ended September 30, 2012

PART - I

(Rs. In Lakhs except per share data)

Particulars

3 Months ended

Preceding 3 months ended

Corresponding3 months ended

For the Half Year ended

For the Half Year ended

Previous year ended

30/09/2012

30/06/2012

30/09/2011

30/09/2012

30/09/2011

31/03/2012

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Audited

1

Income From Operations

(a)

Net Sales/ Income From Operations

Product & Product related

6,969

7,086

11,703

14,055

21,593

42,949

Services

835

1,112

1,113

1,947

2,250

4,834

Total Income From Operations (Net)

7,804

8,198

12,816

16,002

23,843

47,783

2

Expenses

(a)

Cost of Hardware, Software & Services

273

153

297

426

459

870

(b)

Employee Benefits Expense and Sub-contract charges

5,231

6,342

6,884

11,573

13,475

25,358

(c)

Other Expenditure

2,901

1,186

1,981

4,087

4,204

8,588

(d)

Depreciation and Amortisation Expense

117

126

209

243

419

780

Total Expenses

8,522

7,807

9,371

16,329

18,557

35,596

3

Profit / (Loss) From Operations before Other Income, Finance costs and Exceptional items (1-2)

 (718)

391

3,445

 (327)

5,286

12,187

4

Other Income

50

24

73

74

741

1,287

5

Profit / (Loss) From Ordinary activities before Finance costs and Exceptional items (3+4)

 (668)

415

3,518

 (253)

6,027

13,474

6

Finance Costs

1,314

809

1,066

2,123

2,097

4,285

7

Profit / (Loss) From Ordinary activities after Finance costs but before Exceptional items (5+6)

 (1,982)

 (394)

2,452

 (2,376)

3,930

9,189

8

Exceptional Items (Net) (Refer Note 2)

3,997

-

3,782

3,997

3,875

5,670

9

Profit / (Loss) From Ordinary activities before Tax (7+8)

 (5,979)

 (394)

(1,330)

 (6,373)

55

3,519

10

Tax Expense (Net)

117

115

(35)

232

28

335

11

Net Profit / (Loss) From Ordinary activities after Tax (9+10)(Refer Note 4 and 8 )

 (6,096)

 (509)

(1,295)

 (6,605)

27

3,184

12

Paid up Share Capital

- Equity (Face value of Rs.10/-)

15,865

6,931

6,931

15,865

6,931

6,931

13

Reserve excluding Revaluation Reserves as per balance sheet of previous accounting year

7,529

14

Earnings per share (before extraordinary items) (of Rs 10/- each) (not annualised in case of the three month periods):

Basic

 (4.04)

 (0.73)

(1.87)

 (5.99)

0.04

4.59

Diluted

 (4.04)

 (0.73)

(1.87)

 (5.99)

0.04

4.59

PART - II

A

PARTICULARS OF SHAREHOLDING

1

Aggregate of Public shareholding:*

Number of shares

143,182,791

53,831,645

52,074,405

143,182,791

52,074,405

 54,200,225

Percentage of holding (to total shareholding)

90.25%

77.67%

75.13%

90.25%

75.13%

78.20%

2

Promoters and promoter group

Shareholding

a) Pledged/Encumbered

- Number of shares

8,474,044

7,601,801

6,601,801

8,474,044

6,601,801

7,601,801

- Percentage of shares (as a % of the total shareholding of promoter and promoter group)

100.00%

89.71%

81.49%

100.00%

81.49%

93.83%

 - Percentage of shares (as a% of the total share capital of the company)

5.34%

10.97%

9.52%

5.34%

9.52%

10.97%

 b) Non-encumbered

- Number of Shares

-

872,243

1,500,000

-

1,500,000

500,000

- Percentage of shares (as a% of the total shareholding of promoter and promoter group)

0.00%

10.29%

18.51%

0.00%

18.51%

6.17%

- Percentage of shares (as a % of the total share capital of the company)

0.00%

1.26%

2.16%

0.00%

2.16%

0.72%

* Total public shareholding as defined under clause 40A of the listing agreement (excludes underlying shares for GDRs)

Global Depository Receipts

3 Months ended 30/09/2012

Preceding 3months ended 30/06/2012

Corresponding3 months ended 30/09/2011

For the Half Year ended 30/09/2012

For the Half Year ended 30/09/2011

Previous year ended 31/03/2012

- Number of underlying Equity Shares

6,989,399

7,005,083

9,134,566

 6,989,399

9,134,566

7,008,746

- Percentage of Share Holding

4.41%

10.10%

13.19%

4.41%

13.19%

10.11%

Particulars

3 Months ended 30/09/2012

B

INVESTOR COMPLAINTS

Pending at the beginning of the quarter

Nil

Received during the quarter

4

Disposed of during the quarter

4

Remaining unresolved at the end of the quarter

Nil

STATEMENT OF ASSETS AND LIABILITIES

Rs. In Lakhs

Particulars

As At

As At

30/09/2012

31/03/2012

Unaudited

Audited

A

EQUITY AND LIABILITIES

1

Shareholders' Funds

(a)

Share capital

15,865

6,931

(b)

Reserves and Surplus

8,207

7,529

Sub-total - Shareholders' funds

24,072

14,460

2

Non-current Liabilities

(a)

Long-term Borrowings

49,578

-

(b)

Deferred Tax Liabilities(net)

-

-

(c)

Other Long-term Liabilities

504

-

(d)

Long-term Provisions

536

585

Sub-total - Non-current liabilities

50,618

585

3

Current Liabilities

(a)

Short-term Borrowings

18,468

12,437

(b)

Trade Payables - Other than acceptances

7,603

7,973

(c)

Other Current Liabilities

5,483

74,204

(d)

Short-term Provisions

386

271

Sub-total - Current liabilities

31,940

94,885

TOTAL - EQUITY AND LIABILITIES (1+2+3)

106,630

109,930

B

ASSETS

1

Non-current Assets

(a)

Fixed Assets

581

773

(b)

Goodwill on Consolidation

85,642

86,569

(c)

Deferred tax assets (net)

141

141

(d)

Long-term Loans & Advances

2,316

2,408

(e)

Other Non-current Assets

1,641

-

Sub-total - Non-current assets

90,321

89,891

2

Current Assets

(a)

Trade Receivables

7,164

7,303

(b)

Cash and Cash Equivalents

599

242

(c)

Short-term Loans & Advances

961

1,212

(d)

Other Current Assets

7,585

11,282

Sub-total - Current assets

16,309

20,039

TOTAL - ASSETS (1+2)

106,630

109,930

Notes :

1

The above results have been reviewed by the Audit Committee and approved by the Board of Directors in their meeting held on November 8, 2012.

2

Exceptional items comprise -

Rs. In Lakhs

Particulars

3 Months ended 30/09/2012

Preceding 3months ended 30/06/2012

Corresponding3 months ended 30/09/2011

For the Half Year ended 30/09/2012

For the Half Year ended 30/09/2011

Previous year ended 31/03/2012

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Audited

Exchange Loss/(Gain) arising on restatement of Foreign Currency Convertible Bonds

-

-

3,838

-

3,931

5,534

Reversal of stock compensation expenses recorded earlier pursuant to voluntary surrender of options by employees

-

-

-

-

-

(404)

Gain on Sale of Assets pertaining to Activation business during the quarter ended September 30, 2011 net of Redundancy costs

-

-

(56)

-

 (56)

(56)

Other Redundancy costs

-

-

-

-

-

596

Goodwill Impairment*

927

-

-

927

-

-

Exceptional Provision for Doubtful trade and other receivables**

3,070

-

-

3,070

-

-

TOTAL

3,997

-

3,782

3,997

3,875

5,670

\* The company has impaired goodwill outstanding in books pertaining to its services business. As impairment in goodwill is not considered to be regular adjustment in the results, the same has been categorised as an exceptional item.

**During the quarter, the Company carried out an assessment of its receivables as at September 30, 2012 and an amount of Rs. 3,070 lakhs has been provided during the quarter towards doubtful receivables. Considering that the amount of provision towards doubtful receivables is significant and relevant in understanding the financial performance during the quarter, it is disclosed separately under exceptional item.

3

Summary of Key Standalone Financial results is as follows -

Rs. In Lakhs

Particulars

3 Months ended 30/09/2012

Preceding 3months ended 30/06/2012

Corresponding3 months ended 30/09/2011

For the Half Year ended 30/09/2012

For the Half Year ended 30/09/2011

Previous year ended 31/03/2012

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Audited

Net Sales/ Income from Operations

6,160

5,717

7,854

11,877

15,502

32,901

Profit / (Loss) from ordinary activities before tax

 (2,801)

 (863)

(2,955)

 (3,664)

 (2,352)

204

Profit / (Loss) from ordinary activities after tax

 (2,801)

 (863)

(2,955)

 (3,664)

 (2,462)

240

4

As permitted under the Proposal approved by the Hon'ble High Court of Karnataka, which was given effect in the year ending March 31, 2011, the Company transferred certain amounts standing to the credit of Capital Reserve to the Business Restructuring Reserve (BRR) and utilised the same for permitted utilisations as under. Had the Proposal not provided for the above accounting treatment :

(Rs. In Lakhs except per share data)

Particulars

3 Months ended 30/09/2012

Preceeding 3months ended 30/06/2012

Corresponding3 months ended 30/09/2011

For the Half Year ended 30/09/2012

For the Half Year ended 30/09/2011

Previous year ended 31/03/2012

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Audited

Revenue would have been lower by

959

959

Loss under Exceptional Items would have been higher /(lower) by

359

-

-

359

-

 (225)

Net profit would have been lower/(higher) by

1,318

-

-

1,318

-

 (225)

Earnings / ( Loss) Per Share would have been

 -Basic

 (4.91)

 (0.73)

(1.87)

 (7.18)

0.04

4.92

 - Diluted

 (4.91)

 (0.73)

(1.87)

 (7.18)

0.04

4.91

5

In view of the losses incurred by the Company during the half year ended September 30, 2012, the excess of the managerial remuneration paid to the directors over the limits prescribed under Schedule XIII of the Companies Act, 1956 has been treated as monies due from the directors, being held by them in trust for the Company, and is included under 'Short-term loans and advances' amounting to Rs. 103.43 lakhs, towards managerial remuneration in excess of the limits laid down under Schedule XIII of the Companies Act, 1956 and not paid as at September 30, 2012. The Company intends to make an application to the Central Government seeking approval for the excess remuneration and accounting therefor will be determined on receipt of the approval from the Central Government.

6

Pursuant to the approval of the holders of "US$ 180 Million 2% convertible unsecured bonds", [of which US$ 39 Million was outstanding ("FCCBs I")] and "US$ 98.7 Million 5% convertible unsecured bonds", [of which US$ 54.8 was outstanding ("FCCBs II")], at their respective meetings held on July 5, 2012 and exchange offers received under the exchange offer memorandum dated June 13, 2012, holders of US$ 38 Million out of FCCBs I and US$ 53.4 Million out of FCCBs II offered their bonds for exchange. Consequently, new secured bonds of US$ 127.721 million ("FCCBs III") were issued with maturity date of July 7, 2017, having a conversion price of Rs.22.79 per equity share and coupon of 5.70% p.a. payable semi-annually on the outstanding bonds. In accordance with the terms of FCCBs III, principal amount of US$ 36.321 Million were mandatorily converted into equity shares at the aforesaid conversion price in July 2012. Further, the maturity period of the un-exchanged portion of FCCBs I of US$ 1 Million and FCCBs II of US$ 1.4 Million stands extended to March 9, 2017, with its other terms and conditions remaining unchanged.The Company has been advised that the restructuring of the FCCB would be exempt from any tax incidence. The Company is in the process of requesting a legal opinion on the matter, and accordingly has not accrued for tax liability, if any. This is a subject matter of Auditors Qualification.

7

The Company has received a demand of service tax of Rs. 3607.60 lakhs and equivalent amount of penalties under the provisions of the Finance Act, 1994 along with the consequential interest, for the period from April, 2006 to July, 2009 towards service tax payable on import of certain services. The Company has filed an appeal contesting the demand along with a stay application seeking a stay of the entire demand before the Central Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore and it is of the view that the demand is not sustainable. Further, the Company contends that in the event of the demand being upheld by the Appellate Authority, the Company is eligible to avail the service tax as input credit upon payment of the same.

8

Pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate affairs, during the quarter ended December 31, 2011, the Company opted to adopt the transitional provisions under paragraph 46A of Accounting Standard 11 (AS 11) 'The Effects of Changes in Foreign Exchange rates' with effect from April 1, 2011. Accordingly, exchange differences arising on restatement of all long term monetary foreign currency assets and liabilities at rates different from those at which they were initially recorded or reported in previous financial statements (whichever is later) are accumulated in the Foreign Currency Monetary Item Translation Difference Account and are amortised over the balance period of such long term asset / liability. The cumulative impact of adopting the above policy upto the nine months ended December 31, 2011 was given effect to in the quarter ended December 31, 2011. Accordingly, the figures for the quarter ended September 30, 2011 disclosed in these results are as published earlier and do not consider the adoption of the above policy. The Losses for the quarter ended September 30, 2011 would have been lower by Rs. 2,471 Lakhs and for the Half year ended September 30, 2011, would have been lower by Rs. 2406 Lakhs, had the policy been followed for the said period.

9

During the Quarter ended September 30, 2012, the Company has granted 57,900 options under its ESOP 2005 scheme.

10

SEGMENT REPORTING:

(Rs. In Lakhs)

Consolidated

3 Months ended

Preceding 3months ended

Corresponding3 months ended

For the Half Year ended

For the Half Year ended

Previous year ended

30/09/2012

30/06/2012

30/09/2011

30/09/2012

30/09/2011

31/03/2012

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Audited

1

Segment Revenue:

(a)

Products & Product related

6,969

7,086

11,703

14,055

21,593

42,949

(b)

Services

835

1,112

1,113

1,947

2,250

4,834

7,804

8,198

12,816

16,002

23,843

47,783

2

Segment Profit/(Loss) before tax, interest & exceptional Items

(a)

Products & Product related

 (511)

454

3,609

 (57)

6,260

13,378

(b)

Services

 (157)

 (39)

(91)

 (196)

 (233)

96

 (668)

415

3,518

 (253)

6,027

13,474

Less: Interest (Net)

1,314

809

1,066

2,123

2,097

4,285

Less : Other Unallocable (Income)/Expenditure & Exceptional items [Net]

3,997

-

3,782

3,997

3,875

5,670

Profit Before Taxation

 (5,979)

 (394)

(1,330)

 (6,373)

55

3,519

3

Details of Capital Employed

(a)

Products & Product related

Segment Assets

105,120

107,525

103,292

105,120

103,292

107,176

Segment Liabilities

12,940

14,333

15,784

12,940

15,784

16,291

(b)

Services

Segment Assets

113

1,291

1,303

113

1,303

1,303

Segment Liabilities

154

228

236

154

236

184

11

Previous period / year figures have been re-grouped and/or re-arranged to conform with the current period.

12

Pursuant to clause 41 of the Listing Agreement, the Company has opted to publish the consolidated financial results. The standalone financial results, however, are being made available to the Stock Exchanges where the securities of the Company are listed and are also being posted on the Company's website www.subex.com.

Certain statements in this release concerning our performance may be forward looking statements which involve risks and uncertainties that could cause actual results to vary materially from those in such statements. These risks and uncertainties include, and are not limited to, fluctuations in earnings, intense competition and success of investments.

By Order of the Board

Bangalore

Surjeet Singh

November 8, 2012

Managing Director & CEO

 For further details on the results, please visit our website: www.subex.com