SUBX.L Regulatory News (SUBX)

SUBEX LIMITED

Registered office: Pritech Park - SEZ, Block-09, 4th Floor, B Wing, Survey No. 51-64/4, Outer ring road, Bellandur Village,Varthur Hobli, Bangalore -560 103

Statement of Audited Consolidated Financial Results for the quarter and year ended March 31, 2021

(Rs. in Lakhs)

Quarter ended

Year ended

Particulars

March 31, 2021

December 31, 2020

March 31, 2020

March 31, 2021

March 31, 2020

Audited

Unaudited

Audited

Audited

Audited

Refer note 17

Refer note 17

1

Revenue from operations (Refer note 16)

9,616

9,388

10,427

37,203

36,498

2

Other income

172

106

335

474

563

3

Total income (1+2)

9,788

9,494

10,762

37,677

37,061

Expenses

Employee benefits expense (Refer note 4)

5,017

5,256

4,152

19,720

17,454

Finance costs

45

38

119

296

477

Depreciation and amortization expense

223

424

392

1,378

1,508

Exchange fluctuation loss/(gain), net

291

449

(848)

989

(887)

Other expenses

1,993

1,648

3,297

6,644

10,513

4

Total expenses

7,569

7,815

7,112

29,027

29,065

5

Profit before exceptional items and tax (3-4)

2,219

1,679

3,650

8,650

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)] Provision for service taxreceivable (Refernote 6

Gain on termination of lease agreement (Refer note 7)

-

-

-

-

(31,473)

-

-

-

-

761

-

-

-

-

(1,054)

-

-

-

(267)

-

-

-

-

554

-

6

Total exceptional items

-

-

-

287

(31,766)

7

Net profit/ (loss) before tax (5+6)

2,219

1,679

3,650

8,937

(23,770)

8

Tax expense, net

Current tax charge

Provision for MAT credit [Refer note 8  (i)]

(Reversal)/provision - foreign withholding taxes [Refer note 8 (ii)] Deferred tax charge/(credit) (Refer note 9)

639

49

35

696

117

-

-

425

-

425

(541)

208

105

399

754

561

551

(114)

2,670

1,849

Total tax expense

659

808

451

3,765

3,145

9

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

1,560

871

3,199

5,172

(26,915)

10

Other comprehensive income/ (loss) net of tax expense

Items that will be reclassified subsequently to profit or loss:

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

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

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

61

455

(200)

636

5

26

(14)

21

(12)

(34)

Total other comprehensive income/ (loss)

87

441

(179)

624

(29)

11

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

1,647

1,312

3,020

5,796

(26,944)

12

Paid up equity share capital (Refer note 10)

[face value of Rs. 5 each w.e.f September 29, 2020 and Rs. 10 upto September 28,

2020]

28,100

28,100

56,200

28,100

56,200

13

Other equity

-

-

-

26,755

(4,661)

14

Earnings/(loss) per share (of Rs. 5/- each w.e.f September 29, 2020 and Rs. 10 upto September 28, 2020) (not annualised in case of the interim periods) (Refer note 10):

- Basic

- Diluted

0.29

0.28

0.16

0.16

0.59

0.59

0.96

0.94

(4.94)

(4.94)

SUBEX LIMITED

Registered office: Pritech Park - SEZ, Block-09, 4th Floor, B Wing, Survey No. 51-64/4, Outer ring road, Bellandur Village,Varthur Hobli, Bangalore -560 103

Statement of Consolidated Assets and Liabilities

(Rs. in Lakhs)

A

B

As at

Particulars

March 31, 2021

March 31, 2020

Audited

Audited

ASSETS

Non-current assets

Property, plant and equipment

1,177

434

Right-of-use assets

1,962

4,424

Goodwill on consolidation

34,409

34,409

Other intangible assets

-

3

Financial assets

Loans

300

533

Other balances with banks

39

189

Income tax asset (net)

3,479

3,305

Deferred tax asset

125

262

Other non-current assets

-

267

41,491

43,826

Current assets

Financial assets

Loans

220

104

Trade receivables

9,215

9,206

Cash and cash equivalents

14,294

9,043

Other balances with banks

379

67

Other financial assets

6,428

5,264

Other current assets

639

588

31,175

24,272

Total Assets

72,666

68,098

EQUITY AND LIABILITIES

Equity

Equity share capital

28,100

56,200

Other equity

26,755

(4,661)

Total equity

54,855

51,539

Liabilities

Non-current liabilities

Financial liabilities

Lease Liabilities

1,575

3,458

Provisions

275

355

Deferred tax liabilities(net)

6,289

3,774

8,139

7,587

Current liabilities

Financial liabilities

Borrowings (Refer note 15)

584

-

Lease Liabilities

420

1,409

Trade payable

- total outstanding dues of micro enterprises and small enterprises

66

41

- total outstanding dues of creditors other than micro enterprises and small enterprises

1,245

1,605

Other financial liabilities

3,045

2,212

Other current liabilities

2,935

2,342

Provisions

791

649

Income tax liabilities (net)

586

714

9,672

8,972

Total liabilities

17,811

16,559

Total equity and liabilities

72,666

68,098

SUBEX LIMITED

Consolidated statement of cash flows for the year ended March 31, 2021

(Rs. in Lakhs)

Year ended

Particulars

March 31, 2021

March 31, 2020

Audited

Audited

(A)

Operating activities

Profit/(loss) before tax expense

8,937

(23,770)

Adjustments to reconcile profit/(loss) before tax expense to net cash flows:

Depreciation of property, plant and equipment and right-of-use assets

1,375

1,503

Amortization of intangible assets

3

5

Gain on disposal of property, plant and equipment (net)

(4)

-

Interest income (including fair value changes)

(374)

(156)

Finance costs (including fair value changes)

296

477

Allowance for expected credit losses

(153)

289

Expense on share-based payment

148

101

Gain on termination/modification of lease agreement

(554)

(6)

Provision no longer required written back

-

(761)

Advance recoverable written-off

-

234

Provision for service tax receivable

267

-

Impairment of goodwill

-

31,473

Net foreign exchange differences

720

(744)

Operating profit before working capital changes

10,661

8,645

Working capital adjustments:

(Increase)/ decrease in loans

299

52

(Increase)/ decrease in trade receivables

(63)

(181)

(Increase)/ decrease in other financial assets

(1,010)

(718)

(Increase)/ decrease in other assets

(43)

(2)

Increase/ (decrease) in trade payables

(437)

643

Increase/ (decrease) in other financial liabilities

573

(669)

Increase/ (decrease) in other current liabilities

514

328

Increase/ (decrease) in provisions

5

(17)

10,499

8,081

Income tax paid (including TDS, net of refund)

(1,404)

(1,457)

Net cash flows from operating activities

9,095

6,624

(B)

Investing activities

Purchase of property, plant and equipment

(862)

(353)

Proceeds from sale of property, plant and equipment

7

-

Movement in margin money deposit (net)

(154)

426

Purchase of treasury shares by ESOP trust

(22)

(611)

Interest received

309

108

Net cash flows used in investing activities

(722)

(430)

(C)

Financing activities

Proceeds from exercise of ESOP

141

25

Proceeds from borrowings

600

-

Interest paid

(271)

(452)

Repayment of lease liability

(931)

(907)

Payments of dividend

(2,746)

-

Net cash flows used in financing activities

(3,207)

(1,334)

(D)

Net increase in cash and cash equivalents (A+B+C)

5,166

4,860

Net foreign exchange difference on cash and cash equivalents

85

236

Cash and cash equivalents at the beginning of the year

9,043

3,947

(E)

Cash and cash equivalents at the end of the year

14,294

9,043

1

Notes:

The above results have been reviewed by the Audit Committee and approved by the Board of Directors in their meeting held on May 17, 2021.

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

Year ended

Particulars

March 31, 2021

December 31, 2020

March 31, 2020

March 31, 2021

March 31, 2020

Audited

Unaudited

Audited

Audited

Audited

Refer note 17

Refer note 17

Total income

2,573

510

2,727

5,510

3,170

Net profit/ (loss) before tax expense

1,186

125

2,217

2,651

(20,470)

Net profit/ (loss) for the period/ year

1,157

129

2,099

2,622

(20,588)

Total comprehensive income / (loss) for the period/ year

1,162

127

2,082

2,622

(20,609)

4

Employee benefits expenses for the quarters ended March 31, 2021, December 31,2020 and March 31, 2020 are net of reversal of provision no longer required, in respect of employee incentives relating to sales and delivery commissions, amounting to Rs. 486 Lakhs, Rs. 43 Lakhs and Rs. 678 Lakhs, respectively, and that for the year ended March 31, 2021 and March 31, 2020 amounting to Rs. 333 Lakhs and Rs. 692 Lakhs respectively.

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. As at March 31, 2021, the management has reassessed its projections and assumptions and has concluded that, the carrying value of it's goodwill is appropriate.

(ii) During the previous year ended March 31, 2020, the Company 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 paid an amount of Rs.  820 lakhs (net of Rs. 234 Lakhs recoverable from such ex-employees). Accordingly, the aforesaid litigation was amicably settled.

6

During the year ended March 31, 2021, service tax receivable of Rs. 267 lakhs has been provided for considering the uncertainty as regards to its realisation.

7

Represents gain arising on termination of the lease agreement of existing office premises in India, accounted in accordance with Ind AS 116 - Leases.

8

(i) During the previous year ended March 31, 2020, the MAT credit entitlement of Rs. 425 Lakhs has been provided considering the uncertainty with regards to its utilisation.

(ii) Represents reversal/provision in respect of foreign withholding taxes deducted/ deductible by the overseas customers of the Group. Considering the expected utilisation of foreign withholding taxes, provision of Rs. 723 Lakhs (including provision of Rs. 279 Lakhs as at April 01, 2020) made during the earlier quarters, has been reversed during the quarter ended March 31, 2021.

9

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.

10

The Board of Directors in its meeting held on February 07, 2020, 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 Hon'ble NCLT approved the said Scheme vide its order dated September 23, 2020. Consequently, the Company filed a certified copy of the Order with Registrar of Companies ('ROC') on September 29, 2020 and utilized an amount of Rs. 28,100 Lakhs from paid-up share capital of the Company by reducing the face value of the equity shares from Rs. 10/- to Rs. 5/- each and Rs. 10,301 Lakhs from securities premium to write-off its accumulated losses of Rs. 38,401 Lakhs.

11

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.

12

The full impact of COVID - 19 still remains uncertain and could be different from the estimates considered while preparing these consolidated financial results. The Group shall continue to closely monitor any material changes to future economic conditions.

13

The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Group will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

14

The Board of Directors at its meeting held on February 01,2021 has declared an interim dividend of Rs. 0.50/- (10 %) per equity share on face value of Rs. 5/- each for the financial year 2020-2021.

The Board of Directors has also recommended a final dividend of Rs. 0.25/-(5%) per equity share on face value of Rs. 5/- each for the financial year 2020-2021.This payment is subject to the approval of shareholders in the forthcoming Annual General Meeting of the Company.

15

The US Federal government in the wake of COVID 19 pandemic has provided support to business through Paycheck Protection Program (PPP). Subex Inc. have obtained a benefit under this scheme for Rs. 600 Lakhs during May 2020. This loan is eligible for forgiveness on fulfillment of certain conditions. Subex Ind. has applied for forgiveness and application is pending with Small Business Administration, United States government agency for review and approval (SBA). Pending, approval of the forgiveness application, the benefit is reflected as borrowings and in the event the application is not approved, the benefit needs to be refunded along with interest @ 1% p.a.

16

In the quarter and year ended March 31, 2020, revenue from operations included revenue from sale of hardware amounting to Rs. 993 Lakhs.

17

The figures of last quarter of current year and previous year are the balancing figures between the audited figures in respect of the full financial year and the published unaudited year to date figures for the nine months of the respective year.

Place: Bengaluru

Date: May 17, 2021

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

Vinod Kumar Padmanabhan Managing Director & CEO