SUBX.L Regulatory News (SUBX)

SUBEX LIMITED

Registered office: RMZ Ecoworld, Outer Ring Road, Devarabisanahalli, Bangalore - 560 103

Statement of Unaudited Consolidated Financial Results for the quarter ended June 30, 2020)

(Rs. in Lakhs)

Quarter ended

Year ended

Particulars

June 30, 2020

March 31, 2020

June 30, 2019

March 31, 2020

Unaudited

Audited

Unaudited

Audited

(Refer note 12)

Income

1

Revenue from operations

8,870

10,427

7,895

36,498

2

Other income

96

335

36

563

3

Total income (1+2)

8,966

10,762

7,931

37,061

Expenses

Employee benefits expense (Refer note 4)

4,557

4,152

4,309

17,454

Finance costs

110

119

122

477

Depreciation and amortisation expense

366

392

371

1,508

Exchange fluctuation gain, net

(189)

(848)

(259)

(887)

Other expenses

1,542

3,297

2,096

10,513

4

Total expenses

6,386

7,112

6,639

29,065

5

Profit before exceptional items and tax expense (3-4)

2,580

3,650

1,292

7,996

Exceptional items

Impairment of goodwill [Refer note 5(i)]

Provision no longer required written back Provision for claim settlement [Refer note 5(ii)]

-

-

-

(31,473)

-

-

-

761

-

-

-

(1,054)

6

Total exceptional items

-

-

-

(31,766)

7

Net profit/ (loss) before tax expense (5-6)

2,580

3,650

1,292

(23,770)

8

Tax expense, net

Current tax charge

Provision for MAT credit [Refer note 6 (i)]

Provision - foreign withholding taxes [Refer note 6 (ii)] Deferred tax charge/ (credit) (Refer note 7)

1

35

1

117

-

425

-

425

346

105

223

754

717

(114)

540

1,849

Total tax expense

1,064

451

764

3,145

9

Net profit/ (loss) for the period/ year (7-8)

1,516

3,199

528

(26,915)

10

Other comprehensive income/(loss) net of tax expense

Items that will be reclassified subsequently to profit or loss:

Net exchange differences (loss)/ gain on translation of foreign operations

Items that will not be reclassified subsequently to profit or loss:

Re-measurement (loss)/ gain on defined benefits plan

(38)

(200)

(266)

5

(4)

21

(10)

(34)

Total other comprehensive income/(loss)

(42)

(179)

(276)

(29)

11

Total comprehensive income/(loss) for the period/ year (9+10)

1,474

3,020

252

(26,944)

12

Paid up equity share capital

56,200

56,200

56,200

56,200

[face value of Rs 10 (March 31, 2020: Rs 10)]

13

Other equity

-

-

-

(4,661)

14

Earnings/ (loss) per share (of Rs 10/- each) (not annualised in case of the interim periods)

(Refer note 10):

- Basic

0.28

0.59

0.10

(4.94)

- Diluted

0.28

0.59

0.10

(4.94)

1

Notes:

The above results have been reviewed by the Audit Committee and approved by the Board of Directors in their meeting held on August 10, 2020.

The financial results have been prepared in accordance with the recognition and measurement principles laid down in the applicable Indian Accounting Standards ("Ind AS") prescribed under section 133 of the Companies Act, 2013, read with relevant rules thereunder and in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended.

The financial results of Subex Limited (Standalone information): (Rs in Lakhs)

2

3

Quarter ended

Particulars

June 30, 2020

March 31, 2020

June 30, 2019

March 31, 2020

Unaudited

Audited

Unaudited

Audited

(Refer note 12)

Total income

1,332

2,727

516

3,170

Net profit/ (loss) before tax expense

900

2,217

(512)

(20,470)

Net profit/ (loss) for the period/ year

900

2,099

(512)

(20,588)

Total comprehensive income for the period/ year

899

2,082

(513)

(20,609)

4

Employee benefits expenses for the quarters ended June 30, 2020, March 31, 2020, and June 30, 2019 are net of reversal of provision no longer required, in respect of

employee incentives relating to sales and delivery commissions, amounting to Rs 333 Lakhs, Rs  678 Lakhs and  Rs  450 Lakhs, respectively, and that for the year ended

March 31, 2020 amounting to Rs 692 Lakhs.

5

(i) During the previous year ended March 31, 2020, considering the challenges and significant investment requirements of telecom operators which has resulted in

longer opportunity conversion cycle and lower spends towards IT solutions, the management had carried out the annual impairment exercise as at December 31, 2019 in

respect of carrying value of goodwill and basis valuation carried out by an external valuation expert, had made an impairment provision of  Rs  31,473 Lakhs towards

carrying value of goodwill. In view of the COVID -19 pandemic, the management has reassessed its projections and assumptions and has concluded that, the carrying

value of it's goodwill as at June 30, 2020 is appropriate.

(ii) During the previous year ended March 31, 2020, the Company had entered into settlement agreement with former MD & CEO and former COO of the company in

respect of long drawn litigation wherein certain claims were made against the Company. In terms of the settlement agreement, the Company has paid an amount of  Rs

820 lakhs (net of Rs 234 Lakhs recoverable from such ex-employees). Accordingly, the aforesaid litigation is amicably settled.

6

(i) During the previous quarter and year ended March 31, 2020, the MAT credit entitlement of Rs 425 Lakhs has been provided for considering the uncertainty as

regards to its utilisation.

(ii) Represents provision in respect of withholding taxes deducted/ deductible by the overseas customers of the Group. During the previous quarter and year ended

March 31, 2020, the Group has reversed an amount of Rs 308 Lakhs considering it is no longer necessary on account of favourable assessment order received allowing

foreign tax credit in respect of AY 2016-17.

7

Deferred tax charge/ (credit), comprises of liability arising on account of tax benefits from amortisation of intangible assets of Subex Assurance LLP, net of deferred tax

assets arising on account of carry forward losses and other taxable temporary differences, which arose mainly on account of business restructuring effected from

November 1, 2017, wherein, the Company's RMS business and the Digital business was transferred on going concern basis to Subex Assurance LLP and Subex Digital

LLP respectively. The liability for the quarter and year ended March 31, 2020 in respect of tax benefits from amortisation of intangibles is net of provision no longer

considered necessary amounting to Rs 1,014 Lakhs considering the favourable assessment order in respect of AY 2016-17 with respect to foreign tax credit allowance.

8

The Board of Directors in its meeting held on February 07, 2020, has approved a scheme of Capital Reduction in accordance with Section 52 of the Companies Act,

2013 and Section 66 of the Companies Act, 2013 read with National Company Law Tribunal ('NCLT') (Procedure for reduction of share capital of Company) Rules,

2016 and other applicable provisions of the Companies Act, 2013. The abovementioned scheme has also been approved by Shareholders with requisite majority via

postal ballot on June 25, 2020. Subject to the approval from NCLT and other statutory authorities as and where applicable, the Accumulated Losses of Rs 38,401 Lakhs

as at December 31, 2019 shall be written off against the paid-up share capital of the Company for an amount of Rs 28,100 Lakhs by reducing the face value of the equity shares from Rs 10/- to Rs 5/- each and Securities Premium Account balance for an amount of Rs 10,301 Lakhs.

9

The Group is engaged in the business of software products and related services, which are monitored as a single segment by the Chief Operating Decision Maker,

accordingly, these, in the context of Ind AS 108 on Operating Segments Reporting are considered to constitute one segment and hence the Group has not made any

additional segment disclosures.

10

Subex Employee Welfare and ESOP Benefit Trust (hereinafter referred to as the "ESOP Trust"), registered and authorised to acquire shares of the Company through

secondary market for providing share-based payments to its employees, is consolidated in the standalone financial results of the Company and the shares reacquired and

held by ESOP Trust are treated as treasury shares and recognised at cost and deducted from other equity. The shares held by the Trust were reduced on a weighted

average basis from outstanding number of shares for computation of basic and diluted EPS of the Company.

11

The Group has considered internal and certain external sources of information including economic forecasts, budgets required to meet performance obligations and

likely delays on contractual commitments, upto the date of approval of these consolidated financial results, in determining the possible impact from the COVID-19

pandemic. The Group has used the principles of prudence in applying judgements, estimates and assumptions and based on the current estimates, the Group expects to

fully recover the carrying amount of it's assets. The impact of the global health pandemic may be different from that estimated as at the date of approval of these

consolidated financial results and the Group will continue to closely monitor any material changes to its assessment of economic impact of COVID- 19 pandemic.

12

The figures of last quarter of previous year is the balancing figures between the audited figures in respect of the full financial year ended March 31, 2020 and the

published unaudited year to date figures for the nine months ended December 31, 2019.

Place: Bengaluru Vinod Kumar Padmanabhan

Date: August 10, 2020 Managing Director & CEO

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