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 and six months ended September 30, 2020

( ₹ in Lakhs)

Particulars

Quarter ended

Year to date figures for the six months ended

Year ended

September 30, 2020

June 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

March 31, 2020

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Audited

1

2

Income

Revenuefromoperations 

Other income

9,329

100

8,870

96

8,567

140

18,199

196

16,462

176

36,498

563

3

Total income (1+2)

9,429

8,966

8,707

18,395

16,638

37,061

Expenses

Employee benefits expense (Refer note 4)

4,890

4,557

4,437

9,447

8,746

17,454

Finance costs

103

110

121

213

243

477

Depreciation and amortization expense

365

366

378

731

749

1,508

Exchange fluctuation loss/(gain), net

438

(189)

(292)

249

(551)

(887)

Other expenses

1,461

1,542

2,352

3,003

4,448

10,513

4

Total expenses

7,257

6,386

6,996

13,643

13,635

29,065

5

Profit before exceptional items and tax (3-4)

2,172

2,580

1,711

4,752

3,003

7,996

Exceptional items

Gain on termination of lease agreement (Refer note 11) Provision for service tax receivable (Refer note 8) Impairment of goodwill [Refer note 5(i)]

Provision no longer required written back

Provision for claim settlement [Refer note 5(ii)]

554

(267)

-

-

-

-

-

-

-

-

-

-

-

-

-

554

(267)

-

-

-

-

-

-

-

-

-

-

(31,473)

761

(1,054)

6

Total exceptional items

287

-

-

287

-

(31,766)

7

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

2,459

2,580

1,711

5,039

3,003

(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 (Refer note 7)

7

- 386

841

1

- 346

717

1

- 263

817

8

- 732

1,558

2

- 486

1,357

117

425

754

1,849

Total tax expense

1,234

1,064

1,081

2,298

1,845

3,145

9

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

1,225

1,516

630

2,741

1,158

(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 (loss)/ gain on defined benefits plan

158

(38)

(124)

120

(390)

5

(20)

(4)

(25)

(24)

(35)

(34)

Total other comprehensive income/ (loss)

138

(42)

(149)

96

(425)

(29)

11

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

1,363

1,474

481

2,837

733

(26,944)

12

Paid up equity share capital (Refer note 9)

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

28,100

56,200

56,200

28,100

56,200

56,200

13

Other equity

-

-

-

-

-

(4,661)

14

Earnings/(loss) per share (of ₹ 5/- each w.e.f September 29, 2020 and ₹ 10 upto September 28, 2020) (not annualised in case of the interim periods) (Refer note 9):

- Basic

- Diluted

0.23

0.23

0.28

0.28

0.12

0.12

0.51

0.51

0.21

0.21

(4.94)

(4.94)

SUBEX LIMITED

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

Statement of Consolidated Assets and Liabilities

( ₹ in Lakhs)

A

 B

Particulars

As at

September 30, 2020

March 31, 2020

Unaudited

Audited

ASSETS

Non-current assets

Property, plant and equipment Right-of-use assets

Goodwill on consolidation

Other intangible assets

Financial assets

Loans

Other balances with banks

Income tax asset (net)

Deferred tax asset

Other non-current assets

Current assets

Financialasses Loans

Trade receivables

Cashandcashequivalents Otherbalanceswithbanks

Other financial assets

Other current assets

Total Assets

EQUITY AND LIABILITIES

Equity

Equity share capital

Other equity

Total equity

Liabilities

Non-current liabilities

Financial liabilities

Lease Liabilities Provisions

Deferred tax liabilities(net)

Current liabilities

Financial liabilities Borrowings Lease Liabilities Trade payable

- total outstanding dues of micro enterprises and small enterprises

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

Other financial liabilities

Other current liabilities

Provisions

Income tax liabilities (net)

Total liabilities

Total equity and liabilities

498

869

34,409

1

64

79

3,225

198

58

434

4,424

34,409

3

533

189

3,305

262

267

39,401

43,826

833

8,630

13,765

246

5,628

658

104

9,206

9,043

67

5,264

588

29,760

24,272

69,161

68,098

28,100

26,359

56,200

(4,661)

54,459

51,539

478

355

5,262

3,458

355

3,774

6,095

7,587

590

469

8

1,038

1,865

3,094

771

772

-

1,409

41

1,605

2,212

2,342

649

714

8,607

8,972

14,702

16,559

69,161

68,098

SUBEX LIMITED

Statement of cash flows for the six months ended September 30, 2020

( ₹ in Lakhs)

(A)

(B)

(C)

(D)

(E)

Particulars

Six months ended

September 30, 2020

September 30, 2019

Unaudited

Unaudited

Operatingactivities Profit before tax

Adjustments to reconcile profit before tax to net cash flows:

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

Interest income (including fair value changes)

Financecosts(includingfairvaluechanges)

Allowance for expected credit losses Expense on share based payment

Gainonterminationofleaseagreement

Provision for service tax receivable

Net foreign exchange differences

Operating profit before working capital changes

Working capital adjustments:

(Increase)/ decrease in loans

(Increase)/ decrease in trade receivables (Increase)/ decreaseinotherfinancialasset (Increase)/ decrease in other assets Increase/ (decrease) in trade payables

Increase/ (decrease) in other financial liabilities Increase/ (decrease) in other current liabilities Increase/ (decrease) in provisions

Income tax paid (including TDS, net of refund)

Net cash flows from operating activities

 Investing activities

Purchaseofproperty,plant and equipmet Movementin margin moneydeposit(net) Purchaseoftreasury shares byESOPtrust Interest received

Net cash flows used in investing activities

Financing activities

ProceedsfromexerciseofESOP Proceeds from borrowings Interest paid

Repayment of lease liability

Net cash flows used in financing activities

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

Net foreign exchange difference on cash and cash equivalents Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

5,039

729

2

(189)

213

(171)

74

(554)

267

314

3,003

746

3

(64)

243

16

48

-

-

(520)

5,724

(22)

355

(279)

(151)

(697)

(347)

874

89

3,475

(7)

89

586

(219)

(1)

(697)

645

62

5,546

(608)

3,933

(710)

4,938

3,223

(210)

(69)

(22)

121

(288)

131

(378)

25

(180)

(510)

31

600

(201)

(508)

-

- (230)

(425)

(78)

(655)

4,680

2,058

42

9,043

101

3,947

13,765

6,106

1

Notes:

The above results have been reviewed by the Audit Committee and approved by the Board of Directors in their meeting held on November 9, 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):

( ₹ in Lakhs)

2

3

Quarter ended

Year to date figures for the six months ended

Year ended

Particulars

September 30, 2020

June 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

March 31, 2020

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Audited

Total income

1,095

1,332

331

2,427

442

3,170

Net profit/ (loss) before tax

440

900

(262)

1,340

(774)

(20,470)

Net profit/ (loss) for the period/ year

436

900

(262)

1,336

(774)

(20,588)

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

434

899

(263)

1,333

(776)

(20,609)

4

Employee benefits expenses for the quarters ended September 30, 2020, June 30, 2020, and September 30, 2019 are net of reversal of provision no longer required, in respect of employee incentives relating to sales and delivery commissions, amounting to ₹ 62 Lakhs, ₹ 333 Lakhs and ₹ 221 Lakhs, respectively, and that for the six months ended September 30, 2020 and September 30, 2019 amounting to ₹ 333 Lakhs and ₹ 450 Lakhs, respectively and for that year ended March 31, 2020 amounting to ₹ 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 ₹ 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 September 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 ₹ 820 Lakhs (net of ₹ 234 Lakhs recoverable from such ex-employees). Accordingly, the aforesaid litigation is amicably settled.

6

(i) During the previous year ended March 31, 2020, the MAT credit entitlement of ₹ 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 year ended March 31, 2020, the Group has reversed an amount of ₹ 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, 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 year ended March 31, 2020 in respect of tax benefits from amortisation of intangibles is net of provision no longer considered necessary amounting to ₹ 1,014 Lakhs considering the favourable assessment order in respect of AY 2016-17 with respect to foreign tax credit allowance.

8

During the quarter ended September 30, 2020, service tax receivable of ₹ 267 Lakhs has been provided for considering the uncertainty as regards to its realisation.

9

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

10

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.

11

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

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.

Place: Bengaluru

Date: November 9, 2020

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

Vinod Kumar Padmanabhan Managing Director & CEO