SUBX.L Regulatory News (SUBX)

February 12, 2020

To

The London Stock Exchange

10 Paternoster Square

London

EC4M 7LS

Dear Sir/Madam,

Sub: Outcome of the Board Meeting of Subex Limited "The Company" held on February 07, 2020

Please be informed that the agenda item summarized hereunder was discussed and approved at the Board Meeting of the Company held on February 07, 2020 at Bengaluru:

·; Unaudited consolidated financial results of the Company for the quarter and nine months ended December 31, 2019.

·; Based on the recommendations of the Audit Committee of the Company, the Board of Directors approved the provision towards impairment of goodwill of Rs 314.73 crores in the consolidated financials with consequent impact on the standalone financials' basis valuation conducted by an external agency. The aforesaid impairment arose considering the global macro-economic environment, challenges faced by Telecom operators globally, including some Indian telecom operators, and the increased competitiveness of the mobile markets, additional investment requirements on newer areas like 5G, wireline fire networks, spectrum acquisition, etc, which lead to pressure on Telecom operators from a revenue growth and margin perspective, forcing them to find way to cut costs.

·; Scheme of Reduction of Capital under Section 66 & Section 52 of the Companies Act, 2013. The Scheme is subject to approval of the shareholders, Hon'ble National Company Law Tribunal, Bengaluru and all other regulatory approvals.

·; Appointment of Mr. Shiva Shankar Naga Roddam (DIN: 07212118) as Whole-Time Director & Chief Operating Officer of the Company with immediate effect.

·; Re-appointment of Ms. Nisha Dutt (DIN:06465957) as an Independent Director of the Company for a period of 5 years with effect from March 25, 2020, subject to the approval of the members.

·; Appointment of KFin Technologies Private Limited (SEBI Registration No. INR000000221) as the Registrar & Transfer Agents (RTA) of the Company with effect from April 15, 2020.

·; Grant of 1,28,00,000 Stock options (performance linked) by the Nomination & Remuneration Committee of the Board of Directors, in accordance with ESOP 2018 Scheme of the Company.

Please find enclosed:

·; The unaudited consolidated financial results of the Company for the quarter and nine months ended December 31, 2019.

We request you to take the aforesaid notification on record.

Thanking you

Yours truly,

For Subex Limited

Anil Singhvi

Chairman & Independent Director

DIN:00239589

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, 2019

Notes:

The above results have been reviewed by the Audit Committee and approved by the Board of Directors in their meeting held on February 7, 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):

Employee benefits expense for the quarters ended December 31, 2019, September 30, 2019, and December 31, 2018 are net of reversal of provision no longer required, in respect of employee incentives relating to sales and delivery commissions, amounting to ` Nil Lakhs, ` 438 Lakhs and ` Nil respectively, and that for the nine months ended December 31, 2019 and December 31, 2018 amounting to ` 888 Lakhs and ` 35 Lakhs and that for the year ended March 31, 2019 amounting to ` 40 Lakhs.

(i) 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 has carried out the annual impairment exercise in respect of carrying value of goodwill and basis valuation carried out by an external valuation expert, has made an impairment provision of ` 31,473 Lakhs towards carrying value of goodwill.

(ii) On January 23, 2020, the Company has 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) which has been provided for as at December 31, 2019. Accordingly, the aforesaid litigation is amicably settled.

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

Deferred tax charge/ (credit), comprises of deferred tax 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 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. Subject to the consent of the Shareholders and the approval from NCLT and other statutory authorities as and where applicable, the Accumulated Losses of ` 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 ` 28,100 Lakhs by reducing the face value of the equity shares from ` 10/- to ` 5/- each and Securities Premium Account balance for an amount of ` 10,301 lakhs.

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.

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.

Effective April 1, 2019, the Group adopted Ind AS 116 "Leases", applied to all lease contracts existing on April 1, 2019 using the modified retrospective method and has taken the cumulative adjustment to retained earnings, on the date of initial application. Accordingly, comparatives for the year ended March 31, 2019 have not been retrospectively adjusted. On transition, the adoption of the new standard resulted in recognition of Right-of-Use asset (ROU) of `4,816 Lakhs and a lease liability of `5,052 Lakhs. The cumulative effect of applying the standard resulted in `442 Lakhs being debited to retained earnings, net of taxes.

Vinod Kumar Padmanabhan Managing Director & CEO

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