Financial Results - 3rd Quarter

SUBEX LIMITED

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

Statement of Unaudited Consolidated Financial Results for the quarter and nine months ended December 31, 2017

( Rs.in Lakhs)

Particulars

 Quarter ended

 Year to date figures for the nine months ended

 Year ended

December 31, 2017

September 30, 2017

December 31, 2016

December 31, 2017

December 31, 2016

March 31, 2017

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Audited

1 2 3

4

(a)

(b)

(c)

(d)

(e)

5

6 7

8

9

10

11 12

13

14

(a) (b)

Income

Revenue from operations

Other income (Refer note 5)

8,643 28

8,106 16

9,578 394

24,367 103

26,248 891

35,733 1,154

Total income (1+2)

8,671

8,122

9,972

24,470

27,139

36,887

Expenses

Employee benefits expense

Finance costs

Depreciation and amortisation expense

Exchange fluctuation loss/ (gain), net Other expenses

4,444 282

155

324

2,454

4,475 210

129

372

2,519

4,047 456

127

(316)

3,085

13,252 717

414 1,203

7,304

12,289

1,532

356

(1,345)

8,536

15,871

2,040

495

(698)

11,651

Total expenses

7,659

7,705

7,399

22,890

21,368

29,359

Profit before exceptional items and tax (3-4)

1,012

417

2,573

1,580

5,771

7,528

Exceptional items, net (Refer note 6)

-

-

-

-

-

(10,890)

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

1,012

417

2,573

1,580

5,771

(3,362)

Tax expense, net

Current tax charge/(credit)

Provision/ (reversal) - foreign withholding taxes (Refer note 7) MAT charge / (credit)

Deferred tax charge/ (credit) (Refer note 8)

11

148

18

474

(149)

199

62

1

126

192

-

-

(44)

545

53

462

226

498

-

-

243

812

(94)

-

Total tax expense

651

113

318

1,016

724

961

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

361

304

2,255

564

5,047

(4,323)

Other comprehensive income, net of tax

Items that will be reclassified subsequently to profit or loss:

Net exchange differences on translation of foreign operations

 Items that will not be reclassified subsequently to profit or loss: Re-measurement (loss)/ gain on defined benefit plans

1

(4)

291

7

(532) (29)

576

(5)

(1,556) (95)

(1,344) (32)

Total other comprehensive income

(3)

298

(561)

571

(1,651)

(1,376)

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

358

602

1,694

1,135

3,396

(5,699)

Paid up equity share capital

[face value of Rs. 10 (March 31, 2017: Rs. 10)] Other equity

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

- Basic

- Diluted

56,200

-

0.06

0.06

56,200

-

0.05

0.05

50,691

-

0.44

0.44

56,200

-

0.10

0.10

50,691

-

1.00

1.00

50,691

17,718

(0.85)

(0.85)

Notes:

1

2

3

4

5

6

The above results have been reviewed by the Audit Committee and approved by the Board of Directors in their meeting held on January 29, 2018.

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 and SEBI Circular No. CIR/CFD/FAC/62/2016 dated July 5, 2016.

The financial results of Subex Limited (Standalone information):

( Rs. in Lakhs)

Particulars

 Quarter ended

 Year to date figures for the nine months ended

 Year ended

 December 31, 2017

 September 30, 2017

 December 31, 2016

 December 31, 2017

 December 31, 2016

 March 31, 2017

 Unaudited

 Unaudited

 Unaudited

 Unaudited

 Unaudited

 Audited

Total income

Net profit/(loss) before tax

Net profit/(loss) for the period/ year

Total comprehensive income for the period/ year

2,884

(445)

(420)

( 424)

7,794

389

310

310

9,079

1,763

1,712

1,683

17,810

378

214

202

24,736

2,810

2,670

2,583

33,694

(429)

(683)

(716)

The Board of Directors of the Company in its meeting held on August 21, 2017 approved the restructuring of the Company's business by way of transfer of its Revenue Maximization Solutions and related businesses ("RMS business") and the Subex Secure and Analytics solutions and related businesses ("Digital business") to its subsidiaries, Subex Assurance LLP and Subex Digital LLP (together referred to as "LLPs"), respectively, hereinafter referred to as the "Restructuring", subject to shareholders and other requisite approvals, to achieve amongst other aspects, segregation of the Company's business into separate verticals to facilitate greater focus on each business vertical, higher operational efficiencies, and to enhance the Company's ability to enter into business specific partnerships and attract strategic investors at respective business levels, with an overall objective of enhancing shareholder value.

The shareholders of the Company approved the Restructuring by way of special resolution passed through postal ballot on September 23, 2017 and subsequently, the Board of Directors of the Company in its meeting held on October 4, 2017 approved

November 1, 2017 to be the effective date of Restructuring.

Accordingly, effective November 1, 2017, the Company's RMS business and the Digital business have been transferred on a going concern basis for a fair value consideration of Rs. 61,564 Lakhs and Rs. 1,869 Lakhs, respectively, in the form of Company's capital contribution in the aforesaid LLPs. Post such Restructuring, the Company continues to directly hold 99.99% share in the capital of, and in the profits and losses of, each of these LLPs and the entire economic interest as well as control and ownership of the RMS Business and Digital Business remains with the Company post such Restructuring.

Other income for the quarters ended December 31, 2017, September 30, 2017, and December 31, 2016, includes write back of withholding taxes paid earlier in respect of interest on FCCBs, which is no longer payable on account of conversion of FCCBs into equity shares of the Company, amounting to Rs. Nil, Rs. Nil and Rs. 377 Lakhs, respectively, that for the nine months ended December 31, 2017 and December 31, 2016 amounting to Rs. 30 Lakhs and Rs. 832 Lakhs, respectively and that for the year ended March 31, 2017 amounting to Rs. 1,037 Lakhs. Such, write back of withholding taxes has been adjusted with other withholding taxes liabilities of the Company.

Exceptional items:

( Rs. in Lakhs)

Particulars

 Quarter ended

 Year to date figures for the six months ended

 Year ended

December 31, 2017

September 30, 2017

December 31, 2016

December 31, 2017

December 31, 2016

March 31, 2017

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Audited

Loss on impairment of goodwill (Refer note 6[i]&[ii])

-

-

-

-

-

(10,890)

Total

-

-

-

-

-

(10,890)

6[i] As at March 31, 2017, the Company assessed the carrying value of goodwill relating to its investment in the subsidiary viz. Subex Americas Inc., amounting to Rs. 9,736 Lakhs. Based on future operational plan, projected cash flows and valuation carried out by an external valuer, the Company made an impairment provision of Rs. 6,010 Lakhs towards the carrying value of goodwill relating to its investment in the said subsidiary. The management was of the view that, the carrying value of the goodwill (net of provision) of Rs. 3,726 Lakhs as at March 31, 2017 was appropriate. There is no change in the management's assessment as regards the aforementioned carrying value of goodwill as at December 31, 2017.

6[ii] As at March 31, 2017, the Company assessed the carrying value of goodwill relating to its investment in the subsidiary viz. Subex (UK) Limited amounting to Rs. 67,036 Lakhs. Based on future operational plan, projected cash flows and valuation carried out by an external valuer, the Company made an impairment provision of Rs. 4,880 Lakhs towards the carrying value of goodwill relating to its investment in the said subsidiary. The management was of the view that, the carrying value of goodwill (net of provision) of Rs. 62,156 Lakhs as at March 31, 2017 was appropriate. There is no change in the management's assessment as regards the aforementioned carrying value of goodwill as at December 31, 2017. Further, pursuant to Restructuring as referred in note 4 above, the RMS business including aforesaid investment has been transferred to Subex Assurance LLP.

7

8

9

10

11

Represents provision in respect of withholding taxes deducted/ deductible by the overseas customers of the Group.

Deferred tax charge / (credit), for the quarter and nine months ended December 31, 2017, comprises of deferred tax liability of ` 766 Lakhs arising on account of tax benefits from amortisation of intangible assets of Subex Assurance LLP and deferred tax assets of Rs.292 Lakhs arising on account of carry forward losses and other taxable temporary differences. The aforesaid deferred taxes arose mainly on account of business restructuring as detailed in note 4 above.

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.

Previous period figures have been regrouped/ reclassified, wherever necessary to confirm to current period's classification.

Pursuant to Regulation 33 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, 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.

Bengaluru Surjeet Singh

Date: January 29, 2018 Managing Director & CEO

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