Annual Financial Report

Sepura PLC

("Sepura," "the Group," or "the Company")

Audited final results for the period ended 28 March 2014

Record revenues and 19% increase in adjusted operating profit 1 despite FX headwinds

Addressable market increased from $0.5 billion to $2.5 billion

Improved outlook for FY15 and FY16

Sepura, a leading global provider of critical communications solutions, today announces its audited final results for the period ended 28 March 2014.

Financial highlights

§ Revenues up 11% to €116.6 million (2013: €104.8 million)

§ Adjusted operating profit 1 up 19% to €12.5 million (2013: €10.5 million); adjusted EPS up 8% to 8.4c (2013: 7.8c)

§ Operating cash conversion of 101% (2013: 119%) and closing net cash of €5.3 million (2013: €6.6 million)

§ Full year dividend increased from 1.68p to 2.00p

§ IFRS operating profit up 77% to €14.4 million (2013: €8.2 million)

Operational highlights

§ Strong demand across core TETRA devices markets

§ 188,000 radios delivered worldwide, up from 154,000 last year

§ Record deliveries of 65,000 (2013: 48,000) in Germany as roll-out accelerates with increased backlog of approximately 72,500 radios

§ Medium term growth drivers validated

§ Sepura Systems and Portalify acquisitions fully integrated

§ Customers in 22 countries invested > €1 million (2013: 14)

§ Installed base grown to 1.2 million radios providing a stable stream of repeat business

Outlook

§ Long term growth prospects enhanced as global migration to digital continues

§ First infrastructure win in North America

§ DMR portfolio launched

§ Improved outlook and guidance for FY15 and FY16

§ Revenue growth of 10% per annum

§ Adjusted EPS growth of 15% and 25% respectively

Commenting on the Company's results, John Hughes, Chairman, said:

"The compelling solution we offer our customers has created a robust and diverse business that is set to increase earnings and cash generation over the coming years. We closed the year with a strong balance sheet, net cash and record order book. We look to the future with growing confidence, reflected in an increase in the dividend from 1.68p to 2.00p."

(1) The calculations of adjusted operating profit and EBITDA, and adjusted diluted EPS, are set out in Notes 4 and 6 to the following condensed consolidated financial statements respectively.

- Ends -

Sepura will hold an analyst presentation at 9.00 am today in the offices of Investec, 2 Gresham Street, London, EC2V 7QP. The presentation slides will be available on the investor relations pages of the Company's website following the event at: http://investors.sepura.com.

The 2014 Annual Report will be distributed to Shareholders on 25 June 2014, together with the Notice of the Annual General Meeting to be held on Wednesday 30 July 2014.

Cautionary statement

This announcement contains certain forward-looking statements with respect to the operations, performance and financial condition of Sepura. By their nature, future events and circumstances can cause results and developments to differ materially from those anticipated. Nothing in this announcement should be construed as a profit forecast. No undertaking is given to update the forward-looking statements whether as a result of new information, future events or otherwise.

Further information

Notes to editors

Sepura is a global leader in the design, manufacture and supply of digital radios, infrastructure and applications for Professional Mobile Radio ("PMR") users, providing specialist solutions for the public safety, transportation, oil and gas, mining, utilities, industrial and other commercial sectors.

Founded in the UK in 2002, Sepura has expanded rapidly across the world and is now a market leader in over 30 countries, with a network of regional partners that sell, and provide local support for, its market-leading products.

Headquartered in Cambridge, England and with over 350 employees, Sepura was admitted to the Official List of the London Stock Exchange on 3 August 2007.

www.sepura.com

Chairman's statement

I am pleased to report on a strong performance across the Group. We have delivered record revenues and a near twenty per cent increase in adjusted operating profit. At the same time we continued our investment in expanding our customer offering, both organically and through acquisition.

Over the last three years we have transformed Sepura from being solely a TETRA devices supplier to a geographically and technologically diverse critical communications solution supplier. Our ability to now offer a one-stop solution combining devices, network and applications has proved compelling to customers, increasing dramatically the size of our addressable market. In the last year we have recorded significant solution sales across a range of new customers and countries, including Canada, Luxembourg, Greece and Lebanon.

We have continued to build our US and Canadian sales organisation and added a number of new distributors. North America is the world's largest PMR market, and we are confident that we can build on our early successes here and make it a significant market for the Group.

We have launched to market our portfolio of DMR products. DMR is a radio standard that is analogous and complementary to TETRA, mainly serving commercial customers, and which is forecast to be the fastest growing segment within PMR over the coming years. While we have modest expectations for DMR in its first year, we believe it can have a significant incremental impact on our revenues and earnings in the medium term.

The compelling solution we offer our customers has created a robust and diverse business that is set to increase earnings and cash generation over the coming years. We closed the year with a strong balance sheet, net cash and record order book. We look to the future with growing confidence, reflected in an increase in the dividend from 1.68p to 2.00p

I would like once again to thank all of our employees for their outstanding contribution, and welcome new colleagues joining from Portalify and Fylde.

John Hughes CBE

Chairman

9 June 2014

Chief Executive's statement

We have delivered double-digit earnings growth for a third consecutive year, increasing adjusted operating profits by 19% to €12.5 million. We have achieved this through our ongoing focus on sales growth and strong operational performance in our core markets. At the same time we are executing on our strategic goal of expanding the Group's offering, through continued new product delivery and the addition of incremental business lines through acquisition, such that we have expanded the size of our addressable market from $0.5 billion to approximately $2.5 billion.

I am pleased to report that we are seeing strong performance in our core TETRA devices markets. In total we shipped 188,000 TETRA devices in FY14 compared to 154,000 in FY13. This growth was driven by Germany but double digit growth in the UK, Norway and Australia also contributed.

Germany produced another record year with 65,000 radios shipped, whilst we grew the backlog of contracted radios to approximately 72,500, up from 30,000 at the end of September. Key wins in Greece, Luxembourg, Austria and Canada ensured that the list of countries that delivered over €1m of revenues during the year grew to 22, up from 14 last year. Our continued focus on product leadership and ensuring product innovation directly meets our customers' demands has been a significant factor in this growth. Combined with our other TETRA markets we now have an installed base of over 1.2 million radios which will yield a growing stream of repeat business, via refresh and accessory sales, over the next few years.

Our infrastructure business has made outstanding progress since its acquisition last year and won its first public safety contracts in new markets including Greece and Lebanon. It also won its first contract in North America, for the initial phase of Toronto Transit Commission's new network, which is currently being deployed, along with other significant commercial sector contracts in Luxembourg, Germany and Malaysia. After the initial contract value, Systems contracts yield a base of recurring revenues throughout the 10-15 year life of these networks. Portalify, the software developer acquired in July, also generates recurring annual revenues from its data applications, which we are well advanced on integrating fully into our solutions offering.

Investment in our DMR portfolio continued during FY14 with the initial range of products launched towards the end of the year. The product range will continue to be expanded this year and has been further augmented by the recent acquisition of Fylde, whose enabling technology provides customers with a simple, low-risk and cost-effective migration from analogue to digital networks. We anticipate an acceleration in the migration from analogue to digital by smaller, commercial users and as a result we expect DMR to contribute materially to revenues in FY15 and both revenue and earnings in FY16.

We have now established a local sales team in North America to promote TETRA and DMR and we are confident that we can build on our early successes, such as Toronto Transit Commission, and make North America a significant market for the Group.

When you combine these growth opportunities with the robustness of our more established markets this gives us confidence in our outlook for the two years ending March 2016. We expect to deliver 10% revenue growth over the next two years with adjusted EPS growth of 15% and 25% respectively.

Gordon Watling,

Chief Executive

9 June 2014

Business review

Operational Review

Over the last three years Sepura has been transformed from a TETRA terminals business into a geographically diverse critical communications solutions provider, with an estimated addressable market of €2.5 billion. Targeted investment in products and markets offering long-term potential has resulted in a third consecutive year of double-digit growth in earnings, and Sepura is positioned to capitalise on the opportunities offered by the accelerating analogue to digital migration.

Building on the strength of our core TETRA devices markets

The Group delivered a record 188,000 devices last year, up from 154,000 in the previous year. This includes record shipments into Germany where the number of registered users is now over 400,000, making it the world's largest TETRA market. Following further wins in the year our share has grown to approximately 60% and the current backlog of contracted orders for future delivery is approximately 72,500, up from 30,000 in September. We also experienced double digit growth in other key markets such as the UK, Norway and Australia.

Our installed base is now c.1.2 million radios across 114 countries. This will provide a growing stream of recurring revenues over the medium term as users look to refresh existing fleets and acquire accessories and applications to maximise the return on their investments in our technology.

PMR: A market with long-term structural growth

The total PMR market is continuing to expand, with an estimated value of $16.5 billion per annum in 2017 when 45 million PMR radios are forecast to be in use globally according to independent research from IHS. An increasing proportion of these will be digital radios, as PMR users migrate from increasingly obsolete analogue networks. These independent market forecasts show the installed base of digital radios growing by over 15% CAGR, from 12.4 million in 2013 to 22.9 million in 2017.

The majority of this growth is expected to come from smaller, frequently single site, digital networks primarily for use by individual commercial organisations. These users prefer a single supplier that can offer a simple migration path to a solution that suits their operational needs. The Group has therefore invested in expanding its routes to market and developing a product portfolio that will enable it to capitalise on these opportunities.

Increasing our addressable market: New geographies

The largest geographical opportunity for the Group is North America, which is the world's largest PMR market and is forecast to generate 25% of the growth in digital PMR users. The Group has recruited a local sales team which is building a pipeline of opportunities for both TETRA and DMR. Their focus is on the 7 million commercial PMR users, especially in key verticals such as oil and gas, transportation and industrials.

The Group has demonstrated its success in entering new geographies with 22 countries generating revenues of over €1 million during the year compared to 14 last year. These revenues include significant infrastructure contract wins in new markets for the Group in Canada, Greece, Lebanon and Luxembourg, which are expected to lead to tenders for terminals in the coming year as these networks become operational. These results also show a recovery in Southern Europe with Spain and Portugal both back generating revenues of over €1 million.

Increasing our addressable market: Commercial users

In addition to entering new geographies, the Group has made further progress in growing revenues from key commercial markets. Revenues from commercial PMR users increased by 13% to €34.4 million, representing 30% of total revenues. The Group has broadened its management team through the appointment of senior executives with responsibility for developing the Group's target verticals, supported by dedicated sales resources with specific sector expertise such as oil & gas.

Developing a broad portfolio of market-leading solutions

The Group has continued to invest in broadening its product portfolio. The acquisition of infrastructure supplier 3T last year was the first step to delivering a complete solution for commercial users requiring a single supplier. The acquisition of software developer Portalify in July has significantly expanded the Group's range of software tools and applications that enable customers to deploy and manage resources more effectively.

The Group has recently launched a portfolio of products utilising DMR which is independently forecast to be the fastest growing segment within PMR over the next 4 years, with the installed base of DMR radios forecast to grow by 4.2 million radios by 2017. The Group's DMR offering incorporates many of the features that have helped build its reputation in TETRA for rugged and reliable products. Management believe the Group will be able to establish a similar reputation in the DMR market which, when combined with Fylde and its enabling technology that were acquired after the end of the year, will enable DMR to become a significant revenue stream for the Group over the medium term.

Becoming a strategic partner for our customers

The Group has invested in developing products and functionality that will address customers' emerging needs over the 15 - 20 year life cycle of a network. This is part of the Group's commitment to building long term relationships with its customers and becoming a single supplier of their critical communications solution. Following the acquisitions of our infrastructure and applications offerings we now, when combined with our terminals portfolio, have the capabilities to provide solutions which generate long-term commitments from customers, with multi-year contracts that are subject to incremental change orders and long-term maintenance agreements. These both contributed to a closing Systems' order book of €7.8 million for delivery in FY15, up from €3.3m last year.

Preparing for accelerated growth

We have taken important steps in preparing the business for a period of accelerated growth. The senior management team has been enhanced with the establishment of two new positions: VP, Government and Public Safety; and VP, Commercial. These provide additional bandwidth to the management team and, more importantly, focus on key market segments for growth.

In addition, we have established a manufacturing capability in Malaysia and are well advanced in the implementation of a new integrated business system.

Financial review

Revenue

The Group delivered record revenues of €116.6 million, up 11% from last year's €104.8 million; €0.7 million of the increase related to Portalify, whose results have been consolidated for the first time following its acquisition on 25 July 2013. The total number of radios shipped increased by 22% from 154,000 to 188,000, while the Group's infrastructure offering, acquired last year, contributed to major wins in new markets including Canada, Greece, Lebanon and Luxembourg.

Gross margin

Gross margin strengthened as forecast in the second half of the year, with a gross margin for H2 of 49.1% compared to 44.9% in H1 and 49.0% for the same period last year. The gross margin for the full year of 47.4% was adversely affected by the foreign exchange movements reported for the first half of the year. On a constant currency basis the gross margin was 48.0%, consistent with the 47.9% reported for the same period last year. As previously reported the volatility of the US$ against the Euro reported last year continued to impact pricing from sub-contract manufacturers during the first half of the current year, while a weaker Sterling had an adverse impact on reported Euro revenues and margins from the Group's domestic market. Product cost reduction programmes and the introduction of higher margin products, such as Portalify's software applications, continue to mitigate any price competition. Changes in product and customer mix were neutral, reflecting the Group's increasing diversity and resilience.

Research and development costs

Gross expenditure on R&D increased by 6% to €16.7 million (2013: €15.8 million). A significant proportion of these costs relate to the fixed Sterling costs of the Group's UK-based development teams. These are hedged 12 months in advance and so reflect last year's GBP/Euro rates, and on a constant currency basis gross expenditure on R&D increased by 1% to €16.0 million.

Sepura's "one stop shop" solution requires a portfolio where each product has the same Sepura look and feel, whether through a common User Interface or industrial design. The integration of both Sepura Systems' and Portalify's development teams into the Group's overall development structure, sharing common tools and methodologies and working on a consolidated product roadmap, has been an important step towards realising that vision. It has also improved efficiency and reduced back-office costs, and thereby reduced gross R&D expenditure to 14.3% of revenues from 15.1% last year. Development of Sepura's next generation of terminals is transitioning from platform development to productisation, and the Group remains on track to release its first products based on the new platform during 2015. The productisation will lead to a short term increase in R&D expenditure in absolute terms but it will continue to fall as a percentage of revenues.

Capitalised development expenditure represented 75% (2013: 76%) of related gross development spend. The related amortisation charge for the period decreased to €8.1 million (2013: €10.2 million) as the development expenditure on several older products is now fully amortised, while an increasing proportion of research and development expenditure is on long-term projects, such as the Group's next generation platform, on which amortisation has yet to commence.

Selling, marketing, distribution and administrative expenses

Selling, marketing and distribution costs increased by 7% to €16.6 million (2013: €15.5 million), reflecting the investments made to expand the Group's addressable market. Current year costs include a full year contribution from Sepura Systems, together with the incremental costs associated with Portalify and the launch of the Group's DMR portfolio. A local sales team has been established in North America, with seven full-time sales employees recruited to address the growing pipeline of TETRA and DMR opportunities in the world's largest PMR market.

Administrative expenses, excluding the IFRS 2 share option cost, non-recurring costs and the amortisation of acquired intangibles increased by 13% compared with the same period last year to €9.5 million from €8.4 million. 7% of this increase related to foreign exchange and the remainder related to the incremental costs of Systems and Portalify following acquisition.

The total cash operating costs, being the gross R&D expenditure, sales and marketing costs and administrative expenses (excluding the IFRS 2 share option cost, associated National Insurance, the amortisation of acquired intangibles and non-recurring costs), increased by 8% to €42.8 million (2013: €39.7 million), reflecting the investment in research and development and routes to market described above.

Operating profit

The Group presents adjusted operating profit as a key performance measure in addition to the operating profit reported under IFRS, as the exclusion of certain non-operational or non-cash items better reflects the underlying trading performance of the Group. Adjusted operating profit for the period has increased by 19% to €12.5 million, (2013: €10.5 million), while on a constant currency basis adjusted operating profit would have been €15.0 million, a 43% increase over last year. The operating profit reported under IFRS was €14.4 million (2013: €8.2 million), representing growth of 77%.

Non-recurring costs

The Group incurred €329,000 of costs, primarily professional fees, in connection with the acquisition of Portalify, together with €261,000 of subsequent restructuring costs.

Taxation

The growth of the business means that Sepura has ceased to qualify as an SME under the UK government's R&D credit scheme, resulting in less tax relief on research and development expenditures as the Group now qualifies under the Large Company rate of 30% rather than the SME rate of 125% applicable in the prior year. While the impact has been partly mitigated by the introduction of the Patent Box regime, the Group incurred a net tax charge for the period of €1.1 million, representing an effective tax rate of 7%, compared to a €1.2 million tax credit in the prior year. This effective rate is expected to increase as the Group grows its revenues and profits in the medium term.

However, the Group continues to benefit from brought forward taxable losses, and had €9.9 million (net) of losses available for offset against future taxable profits (2013: €9.9 million). The Group also has deferred tax liabilities of €6.8 million (2013: €6.6 million) in relation to the development costs capitalised under IFRS, together with €0.8 million (2013: €0.8 million) in relation to acquired intangibles, which do not represent future tax cash payments and will be released to income as the related costs are amortised.

EPS

Adjusted diluted earnings per share, based on expensing development costs as they are incurred and excluding non-recurring costs, the IFRS 2 share option charge, associated National Insurance and the amortisation of acquired intangibles, was 8.4 € cents (2013: 7.8 € cents). IFRS fully diluted earnings per share was 9.4 € cents (2013: 6.5 € cents).

Foreign exchange

The volatility of both Euro / GBP and Euro / USD exchange rates over the last two years has had a €2.5 million adverse impact on the results for the period. Adjusted operating profit on a constant currency basis was €15.0 million, after adjusting for the following items:

§ €0.4 million reduction in the Euro value of the Group's Sterling revenues, as the Euro has strengthened relative to Sterling compared to the same period last year;

§ €0.4 million increase in product costs due to adverse movements in the Euro / USD rate compared to the same period last year, which impacts the cost of components sourced by the Group's manufacturing partners;

§ €0.3 million of transactional net foreign exchange losses compared to the prior year; and

§ €1.4 million increase in the reported Euro value of the Group's Sterling operating costs, as explained below.

The Group has a policy of hedging the majority of its operating expenses, which relate to UK-based development and operations and are incurred in Sterling, and has in place forward contracts to sell Euros and buy Sterling to meet these forecast Sterling expenses for the next twelve months. This provides certainty for the future reported Euro-denominated value of these costs. The average hedge rate for the period was €1.24 / £1, based on prevailing rates during the prior year, compared to €1.16 / £1 for the same period last year which were in turn based on prevailing rates twelve months previously. As a result the Group's hedged Euro operating costs have increased by 6%.

The hedges outstanding at the end of the period covered £19.2 million (2013: £19.4 million) of forecast expenses at rates ranging from €1.169 - €1.219 / £1 (2013: €1.177 - €1.274 / £1), and with a weighted average rate of €1.190 / £1 (2013: €1.239 / £1) compared to the spot rate at the end of the period of €1.205 / £1 (2013: €1.183 / £1). The translation of the Group's hedged Sterling cost base into Euros in the coming year will result in lower reported Euro costs than those reported for the current period. However, the weakening of the Euro both during and since the end of the period, together with the rates currently available for hedging future costs, indicate that this position may reverse in FY16.

Cash flows and financing

The Group's continued focus on working capital management delivered strong cash conversion despite the growth in the business. Cash conversion for the year was 101%, compared to 119% last year. Closing cash balances at 28 March 2014 stood at €8.0 million (2013: €8.6 million), and net cash, after deducting outstanding borrowings acquired with Sepura Systems and Portalify, was €5.3 million (2013: €6.6 million).

Significant non-operating cash flows during the period related to:

§ €5.0 million (2013: €6.6 million) paid for acquisitions;

§ €12.5 million (2013: €12.0 million) spent on capitalised development costs;

§ €4.6 million (2013: €1.5 million) of other capital expenditure, up from prior year as a result of investment in DMR, establishment of a manufacturing capability in Malaysia and investment in a new integrated business system;

§ €3.0 million (2013: €2.4 million) paid in relation to last year's final dividend and this year's interim dividend;

§ €1.3 million (2013: €1.7 million) purchasing shares for Treasury; and

§ €0.2 million (2013: €0.7 million) received from employees exercising share options.

The balance sheet

The cash generation delivered during the period reflects continued focus on working capital. Inventory levels have decreased by €1.3 million, despite the broadening of the Group's product portfolio, by applying Sepura's supply chain expertise to Sepura System's procurement processes. Trade receivables, excluding the impact of the acquisition of Portalify, increased by 16% or €4.8 million compared to the prior period. This was in line with the growth in second half revenues over the same period last year, with Days Sales Outstanding being consistent with prior year at 91 days (2013: 90 days). Trade payables increased by €3.9 million, in line with increased levels of activity across the Group.

Share capital

The Company has continued to purchase shares for Treasury in anticipation of future share option awards vesting, with a further 0.9 million shares (2013: 1.8 million) acquired during the period for total consideration of €1.3 million (2013: €1.7 million). Some of these were utilised to settle options over 0.5 million (2013: 1.7 million) shares that vested and were exercised during the period, leaving 0.5 million shares in treasury at the end of the period.

A further invitation for eligible employees to participate in the Company's SAYE scheme was issued in July, with options over 0.5 million shares subsequently granted at an exercise price of 96p. Options were also granted to senior executives under the Company's Long-Term Incentive Plan totalling 2.0 million shares (2013: 3.1 million). These will vest if targets relating to the period to 31 March 2016 are achieved.

The Company also issued 1.3 million shares to settle €1 million of the contingent consideration payable in respect of the acquisition of 3T Communications AG, now renamed Sepura Systems GmbH, last year.

Dividends

The Board has proposed a final dividend of 1.41p per Ordinary share in respect of the year (2013: 1.17p), payable on 8 August 2014 to shareholders on the register at the close of business on 4 July 2014, giving a total dividend of 2.0p per Ordinary share (2013: 1.68p). This represents a 19% increase on last year's total dividend, reflecting the Group's strong balance sheet, cash generation during the year, and increasing confidence in the future.

Steve Chamberlain,

Chief Financial Officer

9 June 2014

Consolidated Income Statement

1 Non-recurring costs relate to the acquisition of Portalify OY in the current period, as described in Note 3, and subsequent restructuring costs. Non-recurring costs in the prior period related to the acquisition of 3T Communications AG (now renamed Sepura Systems GmbH) and subsequent restructuring costs.

Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

Consolidated Balance Sheet

Consolidated Statement of Cash Flows

Notes to the accounts

1. General information

Sepura plc ("the Company") is a public limited company incorporated and domiciled in England and Wales with registered number 04353801, whose Ordinary shares of £0.0005 each are traded on the Official List of the London Stock Exchange. The Company's registered office is Radio House, St Andrew's Road, Cambridge, CB4 1GR, England.

The Board of Directors approved this preliminary announcement on 9 June 2014. Whilst the financial information included in this announcement has been prepared in accordance with International Financial Reporting Standards ("IFRS") as endorsed by the European Union, this announcement does not itself contain sufficient information to comply with all the disclosure requirements of IFRS and does not constitute statutory accounts of the Company within the meaning of section 435 of the Companies Act 2006.

The auditors have reported on the results for the periods ended 28 March 2014 and 29 March 2013. Their reports were not qualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Statutory accounts for the period ended 28 March 2014 will be delivered to the Registrar of Companies following the Company's Annual General Meeting on 30 July 2014. Details of the resolutions to be proposed at that meeting will be included in the notice of Annual General Meeting to be sent to shareholders. Further copies of the report will be available from the Company Secretary and on the Company's website at www.sepura.com.

2. Basis of preparation

This consolidated financial information has been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union, the IFRS Interpretations Committee (formerly the International Financial Reporting Interpretations Committee ("IFRIC")) interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The consolidated financial information has been prepared on a going concern basis and under the historical cost basis, except for certain financial instruments that have been measured at fair value.

The Company has prepared this consolidated financial information for the period to 28 March 2014, being the nearest Friday to the end of the period.

For the purposes of the preparation of this consolidated financial information, the Group has applied all standards and interpretations that are effective for accounting periods beginning on or after 30 March 2013, none of which had an impact on the reported results of the Group.

3. Acquisition of Portalify OY

On 25 July 2013 the Group announced the acquisition of the entire share capital of Portalify OY, ("Portalify"), which designs and implements software applications. The acquisition of Portalify expands the Group's addressable market by broadening the Group's product portfolio. The initial cash consideration was €1 million, with further contingent consideration of up to €4.9 million payable in cash if Portalify achieves revenue and operating profit targets over an earn-out period.

The book and fair values of the assets and liabilities acquired are as follows:

Intangible assets acquired relate to existing customer contracts and relationships together with software assets developed by Portalify. These are being amortised over the expected useful economic lives, which have been assessed as five years. The goodwill arising on the acquisition is attributable to the value of synergies arising from the acquisition and future profits arising from access to new markets. None of the goodwill on this acquisition is expected to be deductible for tax.

Acquisition costs of €329,000 have been charged to the consolidated income statement during the period, together with €261,000 of subsequent restructuring costs as Portalify is integrated with the Group's existing operations.

Portalify reported a loss after tax for the year ended 31 December 2012 of €0.4 million. Portalify contributed €0.7 million of revenue and €0.1 million of losses to the Group's results for the period since acquisition, while the Group's revenue and earnings would have been €116.9 million and €12.7 million respectively if Portalify had been a member of the Group for the whole period.

4. Adjusted performance measures

The Group presents adjusted figures as key performance measures in addition to those reported under IFRS. These adjusted figures, comprising EBITDA, adjusted EBITDA, adjusted operating profit and adjusted operating margin, exclude certain non-operational or non-cash items and reflect the underlying trading performance of the Group. Earnings before interest, tax, depreciation and amortisation has been calculated as follows:

Adjusted operating profit has been calculated as follows:

Adjusted operating costs have been calculated as follows:

5. Income tax expense (credit)

Factors affecting the tax expense (credit) for the period

The tax expense (credit) for the period is different from the standard rate of corporation tax in the UK, which was 23% (2013: 24%). The differences are explained below:

The Finance Act 2013, which provides for reductions in the main rate of corporation tax from 23% to 21% effective from 1 April 2014 and to 20% effective from 1 April 2015, was substantively enacted on 2 July 2013. These rate reductions have been reflected in the calculation of deferred tax at the balance sheet date.

6. Earnings per share

Basic earnings per share has been calculated by dividing earnings attributable to owners of the parent by the weighted average number of shares of the Company for each period. For diluted earnings per share, the weighted average number of shares is adjusted to allow for the conversion of all dilutive equity instruments.

The Group presents an adjusted earnings per share figure which excludes non-recurring costs, the capitalisation of development costs (together with associated amortisation), the amortisation of acquired intangibles and the IFRS 2 share-option charge, all net of UK Corporation Tax at the standard rate. This adjusted earnings per share figure has been based on adjusted basic earnings for each financial period and on the same number of diluted weighted average shares in issue as the GAAP earnings per share calculation above.

7. Dividends

The Directors have proposed a final dividend in respect of the financial period ended 28 March 2014 of 1.41p per Ordinary share, totalling approximately €2.4m based on the Ordinary shares in issue at 28 March 2014. The proposed dividend is subject to approval by shareholders and has not been included as a liability in these financial statements.

During the current and prior periods the Company paid the following dividends:

8. Borrowings and facilities

Borrowings outstanding at the end of the period

Bank borrowings at Sepura Systems GmbH comprise an export loan of €1,500,000, which bears interest at 1.85%; a term loan of which €433,000 is outstanding, is repayable in monthly instalments of €11,000 and bears interest at 4.56%; and a second term loan of which €33,000 is outstanding and is repayable in quarterly instalments of €27,000. Bank borrowings at Portalify OY comprise development funding loans of €539,000, which are repayable in annual instalments through to 2017 and bear interest at the Bank of Finland base rate less 3% (subject to a minimum of 1%), and €327,000 of other loans repayable monthly or quarterly that bear interest at rates ranging from 1% to 6%.

Facilities

In addition to the above, the Group has a five year, £18 million revolving credit facility, none of which was drawn down at the end of the period. The total costs associated with taking out the new facility were €244,000, which are being amortised over the life of the facility agreement. The facility is secured by a fixed and floating charge over the Group's assets, and includes covenants which are tested quarterly.

9. Provisions

At the end of the period provisions included €4.9 million of contingent consideration relating to the acquisition of Portalify as explained in Note 3 above.

10. Share capital

Authorised share capital

Issued share capital

During the period the following changes occurred in the Company's issued, allotted and fully paid share capital of Ordinary shares of £0.0005 each:

Treasury shares

During the period the following changes occurred in the number of Ordinary shares held in Treasury:

11. Cash generated from operations

12. Reconciliation of cash flows to movements in net funds

13. Post balance sheet event

On 20 May 2014 the Company announced the acquisition of Fylde Micro Limited for initial cash consideration of £2.75 million.