Proposed capital raising of £65 million

27 June 2016

This announcement must not be sent or transmitted, directly or indirectly, into the United States, Australia, Canada or Japan and is not for distribution, directly or indirectly in the United States, Australia, Canada or Japan or any other jurisdiction where the extension or availability of the Capital Raising (and any other transaction contemplated thereby) would (i) result in a requirement to comply with any governmental or other consent or any registration filing or other formality which Sepura regards as unduly onerous, or (ii) otherwise breach any applicable law or regulation.

This announcement is an advertisement for the purposes of paragraph 3.3.2R of the Prospectus Rules made under Part VI of the Financial Services and Markets Act 2000 ("FSMA"), as amended, and is not a prospectus or prospectus equivalent document. Nothing in this announcement shall constitute an offering of any securities. Neither this announcement nor anything contained in it shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. Investors should not subscribe for or purchase any New Ordinary Shares referred to in this announcement except on the basis of the information in the Prospectus (as defined below) only. The Prospectus will be sent to Sepura shareholders and prospectus investors as soon as practicable. The Prospectus will also be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM.

The Prospectus will also be available on the Company's website at: www.sepura.com.

Sepura plc

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

PROPOSED CAPITAL RAISING OF £65 MILLION BY WAY OF FIRM PLACING AND PLACING AND OPEN OFFER OF 185,714,285 NEW ORDINARY SHARES AT 35 PENCE PER SHARE

Sepura plc, a leading provider of critical communications solutions, today announces that it has conditionally raised approximately £65 million (gross) by way of a firm placing and placing and open offer of, in aggregate, 185,714,285 New Ordinary Shares at an issue price of 35 pence per New Ordinary Share (the "Capital Raising").

In addition, the Company and its lending banks have agreed to make certain commercial and other amendments to its existing Facilities Agreement which will be implemented conditional on completion of the Capital Raising.

The Company's unaudited preliminary results for the financial year ended 1 April 2016 have also been released today in a separate announcement.

Transaction Summary

· Issue of 124,258,224 New Ordinary Shares through the Firm Placing, raising gross proceeds of £43.5 million at the Offer Price. The Firm Placed Shares are not subject to clawback and are not part of the Placing and Open Offer.

· Issue of 61,456,061 New Ordinary Shares through the Placing and Open Offer, raising gross proceeds of £21.5 million at the Offer Price.

· Under the Open Offer, Qualifying Shareholders will have an Open Offer Entitlement of 1 Open Offer Share for every 3 Existing Ordinary Shares held.

· The Offer Price represents a discount of 53 per cent. to the closing price of each Existing Ordinary Share of Sepura of 75 pence on 24 June 2016.

· The Firm Placing and Placing and Open Offer, which is subject to shareholder approval, has been fully underwritten by Liberum Capital Limited.

· A general meeting of the Company has been convened on 15 July 2016 to approve the shareholder resolutions required in order for the Capital Raising to proceed (including, in addition, the Related Party Participation described below).

· The Capital Raising will reduce the Group's net debt to EBITDA ratio towards the Board's medium term target of 1.5x.

· The Prospectus containing full details of the Capital Raising is expected to be posted to shareholders shortly. Terms capitalised in this announcement have the meaning given to them in the Prospectus.

· The Prospectus has been submitted to the National Storage Mechanism and is available for inspection at www.morningstar.co.uk/uk/nsm and www.sepura.com.

Capital Raising Statistics

Notes:

(1) On the assumption that no further Ordinary Shares are issued as a result of the exercise of any options or awards under the Sepura Share Schemes between 23 June 2016 (being the latest practicable date prior to the publication of this announcement) and Admission.

Indicative abridged timetable

Each of the times and dates in the table below is indicative only and may be subject to change.

For further information contact:

IMPORTANT INFORMATION

This announcement does not constitute an offer of New Ordinary Shares to any person with a registered address in, or who is resident in, the United States or any other Restricted Jurisdiction. New Ordinary Shares, Open Offer Entitlements and Excess Open Offer Entitlements have not been and will not be registered under the Securities Act, or with any regulatory authority or under the applicable securities laws of any state or other jurisdiction of the United States, or the relevant laws of any state, province or territory of any other Restricted Jurisdiction, or any other Restricted Jurisdiction, and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within any Restricted Jurisdiction or within the United States (as defined in Regulation S under the Securities Act (''Regulation S'')) unless the offer and sale of New Ordinary Shares, Open Offer Entitlements and Excess Offer Entitlements has been registered under the Securities Act or pursuant to an exemption from, or in transaction not subject to, the registration requirements of the Securities Act. The New Ordinary Shares are being offered or sold outside the United States, in reliance on Regulation S.

This announcement does not constitute an offer to sell or a solicitation of an offer to buy New Ordinary Shares in any jurisdiction in which such offer or solicitation is unlawful. This announcement will not be distributed in or into the United States or any of the other Restricted Jurisdictions. This announcement has not been and will not be approved or disapproved by the SEC, any state securities commission in the United States or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy or adequacy of this announcement or any document connected with the Capital Raising. Any representation to the contrary is a criminal offence in the United States. There will be no public offer of the New Ordinary Shares in the United States.

This announcement has been issued by and is the sole responsibility of Sepura. The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this announcement or on its accuracy or completeness. The information in this announcement is subject to change.

Liberum, which is authorised and regulated by the Financial Conduct Authority ("FCA") in the United Kingdom, is acting exclusively for Sepura and no-one else in connection with the Capital Raising, and will not regard any other person (whether or not a recipient of this announcement) as clients of Liberum in relation to the Capital Raising and will not be responsible for providing the protections afforded to clients of Liberum, nor for giving advice in relation to the Capital Raising or any arrangement referred to in, or information contained in, this announcement.

No action has been taken by the Company or Liberum that would permit an offering of the New Ordinary Shares or possession or distribution of this announcement, the Prospectus or any other offering or publicity material relating to the New Ordinary Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company and Liberum to inform themselves about, and to observe, such restrictions.

Apart from the responsibilities and liabilities, if any, which may be imposed on Liberum, under FSMA or the regulatory regime established thereunder, Liberum accepts no responsibility or liability whatsoever or makes any representation or warranty, express or implied, concerning the contents of this announcement including its accuracy, completeness or verification, or concerning any other statement made or purported to be made by it, or on behalf of it, in connection with Sepura, the Group, the new Ordinary Shares, the Capital Raising and Admission, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available. Nothing in this announcement is or shall be relied upon as a promise or representation in this respect, whether as to the past or future.

Subject to applicable law, Liberum disclaims all and any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise (save as referred to above)) which it might otherwise have in respect of this announcement or any statement proposed to be made by it, or on its behalf, in connection with Sepura, the Group, or the arrangements described in this announcement, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available.

Neither Liberum nor any of its representatives makes any representation to any offeree or purchaser of the New Ordinary Shares regarding the legality of an investment in the New Ordinary Shares.

Certain statements contained in this announcement constitute 'forward looking statements' with respect to the financial condition, results of operations and business of the Group and to certain of the Group's plans and objectives with respect to these items. In some cases, these forward looking statements can be identified by the use of forward looking terminology, including the terms 'believes', 'estimates', 'plans', 'prepares', 'anticipates', 'expects', 'intends', 'may', 'will', 'aims', 'due', 'could', 'targets', 'goal' or 'should' or, in each case, their negative or other variations or comparable terminology.

By their very nature forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or will occur in the future. Such forward looking statements are based on numerous assumptions regarding Sepura's present and future business strategies and the environment in which Sepura will operate in the future and are subject to known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Sepura, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such risks, uncertainties and other factors will be set out more fully in the section of the Prospectus headed 'Risk Factors'. These forward looking statements speak only as at the date of this announcement. Investor should specifically consider the factors identified in the Prospectus, which could cause actual results to differ, before making an investment decision.

Except as required by the FCA, the London Stock Exchange or applicable law (including as may be required by the FCA's Listing Rules, Prospectus Rules and the Disclosure and Transparency Rules), Sepura expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained in this announcement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances

on which any such statement is based.

Except where expressly stated, no statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share. Prices and value of, and income from, shares may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance.

The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each Shareholder or prospective investor should consult his, her or its own legal advisers, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice. Persons needing financial advice should consult an appropriate financial adviser authorised under the Financial Services and Markets Act 2000 if resident in the United Kingdom. If not resident in the United Kingdom, they should seek advice from another appropriate authorised independent adviser.

PROPOSED CAPITAL RAISING OF £65 MILLION BY WAY OF FIRM PLACING AND PLACING AND OPEN OFFER OF 185,714,285 NEW ORDINARY SHARES AT 35 PENCE PER SHARE

1. Introduction to the Capital Raising

The Board of Sepura announces today that it intends to raise £65 million (before expenses) by way of the Capital Raising. A prospectus is to be sent to Shareholders shortly.

2. Background

On 26 May 2015, the Company completed the acquisition of the entire issued share capital of Teltronic for €127.5 million. Teltronic provides complete wireless voice and data communications solutions, including infrastructure, terminals, and software, principally for customers in the public safety, transportation and utility sectors. Its vertically integrated business covers the entire PMR value chain, including network infrastructure, terminals and command and control centres. The Group operates in over 50 countries serving customers based primarily in Latin America, the EMEA region and North America.

The acquisition of Teltronic was funded by an underwritten placing and open offer and a partial draw down under the Facilities Agreement. The Facilities Agreement is secured against assets of the Company and includes financial covenants which are tested quarterly.

In recent years, the Group's revenue profile has been significantly weighted to the second half of the year with particularly strong trading in the final weeks of the financial year. On 4 April 2016 the Company issued a trading update in respect of the 12 month period ended 1 April 2016. The Company announced that whilst the overall performance of Teltronic was ahead of expectations, with significantly higher cost synergies than originally anticipated at the time of the Acquisition, the Company expected to report lower than expected revenues and EBITDA for the period as a result of two significant contracts failing to close before the year end, weaker trading in DMR and Applications and a €2.6 million adverse $:€ foreign exchange movement.

The Company also advised in the 4 April 2016 trading update that the year end net debt position was expected to be significantly higher than previously expected at approximately €120 million, caused largely by an expansion in working capital together with further costs relating to the Acquisition and additional investment to accelerate cost synergies. The working capital expansion was primarily caused by the purchase of inventory in anticipation of the Group's expected pipeline of orders before the year end (and the subsequent shortfall in orders described above), together with slower debtor collection, a function of the Company's broader geographic diversity resulting from the Acquisition, with some of these markets experiencing more challenging economic conditions which had impacted cash flows.

Sepura also announced that the Board had held discussions with its debt providers regarding the Company's liquidity requirements and the possibility of covenant breaches, and the Company's debt providers had waived any potential breach of covenants for the quarter ended 1 April 2016.

On 27 April 2016, Sepura announced that it expected to report revenues of €191 million (including organic revenues of €145 million, up 10 per cent. year on year) and adjusted EBITDA of €17 million, primarily impacted by the two significant contracts referred to above not having closed before the year end. The Company also announced that it expected to report net debt for the year end of €119 million.

Sepura also announced that, whilst the working capital expansion of the Company was expected to unwind during this current financial year, the Company was subject to short term cash constraints and the Board remained in continuing discussions with its debt providers regarding its liquidity requirements, a possible extension of its banking facilities and a waiver of a possible covenant breach at 30 June 2016. The 27 April 2016 trading update also confirmed that Sepura had commenced discussions with major shareholders regarding the Capital Raising to reduce leverage and provide working capital to support the development of the business.

Reasons for the Capital Raising

The Board has carefully considered all relevant options and has determined that it is in the best interests of the Group to reduce overall indebtedness by pursuing the Capital Raising.

The Board accordingly believes it is in the best interests of the Group to significantly reduce its indebtedness via the Capital Raising and thereby reduce the risk of any future covenant breach and has set a target of achieving a net debt to EBITDA ratio of 1.5 times as the Group's annual average over the medium term. The proposed Capital Raising is a critical step towards achieving this target.

Despite the performance of the Company during the 2016 Financial Year, the Board believes that Sepura's business is fundamentally sound, with a record order book, strong market position, reduced operating costs from the ongoing synergies from the Teltronic acquisition and a recovery in product margins with the completion of certain low-margin contracts in the 2016 Financial Year. In addition to substantially reducing the risk of a facility covenant breach, the Board believes that a more appropriate capital structure will allow the Company to pursue growth opportunities in its markets.

3. Summary of information on Sepura

Sepura is a leading global provider of critical communications solutions for the PMR market. The Group designs, develops and supplies digital radio solutions, complementary accessories, support tools and devices that are used by a wide range of public safety and commercial organisations.

The Group's strategy is to expand its addressable market, develop leading solutions and build long-term relationships. The Group has expanded from being a UK-focussed terminals supplier into a geographically and technologically diverse supplier of complete mission critical communications solutions. These solutions generally comprise a combination of the following products from the Group's product portfolio:

· Terminals - Sepura provides a comprehensive portfolio of hand-portable and vehicle terminals and accessories that address the operational requirements of the most demanding users and environments.

· Network Systems - Sepura's network infrastructure delivers scalable and seamless communications networks capable of covering single-site campuses right through to national networks.

· Applications - Sepura's software applications are productivity tools that drive improved performance across customers' communications networks.

Since its incorporation in 2002, Sepura has expanded globally to become a market leader (in terms of the supply of hand-portable TETRA terminals) in over 30 countries, with a network of agents, distributors and regional partners allied with a direct sales force in certain jurisdictions that collectively sell, and provide local support for, its products.

For the year ended 27 March 2015, revenue was €131.2 million (2014: €116.6 million) and the six months ended 2 October 2015 saw revenues increase by 70 per cent. year on year to €92.9 million. Sepura's focus on higher margin activities led to an increase of 20 per cent. in the Group's adjusted operating profit to €15.0 million (2014: €12.5 million) for the year ended 27 March 2015 and of 170 per cent. to €7.3 million (H1/2015: €2.7 million) for the six months ended 2 October 2015 compared to the previous financial year and six month period respectively. Underlying diluted earnings per share for the year ended 27 March 2015 were 9.7 cents (2014: 8.4 cents).

4. Use of Proceeds

The Capital Raising is expected to raise £65 million in gross proceeds.

The Group intends to use the expected approximate £60.6 million net proceeds of the Capital Raising to pay down a portion of the amounts outstanding under the Facilities Agreement.

5. Key terms of the Capital Raising

The Company is proposing to raise approximately £60.6 million (net of estimated expenses of approximately £4.4 million) by way of a Firm Placing of 124,258,224 New Ordinary Shares to certain new and existing institutional investors and a Placing and Open Offer of up to 61,456,061 New Ordinary Shares, representing, in aggregate, 50 per cent. of the Enlarged Share Capital, at an issue price of 35 pence per New Ordinary Share.

The issue price of 35 pence per New Ordinary Share represents an effective 53 per cent. discount to the Closing Price of 75 pence per Ordinary Share on 24 June 2016. The Offer Price has been set by the Directors following their assessment of market conditions and following discussions with a number of institutional investors. The Directors are in agreement that the level of discount and method of issue are appropriate to secure the investment necessary.

The Capital Raising has been fully underwritten by Liberum on, and subject to, the terms of the Underwriting Agreement.

The Capital Raising is conditional upon the following:

· the Resolutions being passed by Shareholders at the General Meeting (without material amendment);

· the Underwriting Agreement becoming or being declared unconditional in all respects by no later than 8.00 a.m. on 18 July 2016 and not having been terminated in accordance with its terms prior to Admission; and

· Admission becoming effective by not later than 8.00 a.m. on 18 July 2016 (or such later time and/or date as the parties to the Underwriting Agreement may agree, being not later than 8.00 a.m. on 25 July 2016).

Accordingly, if any of such conditions are not satisfied, or, if applicable, waived, the Capital Raising will not proceed and any Open Offer Entitlements and Excess Open Offer Entitlements admitted to CREST will thereafter be disabled and application monies will be returned to applications (at the applicant's risk) without interest as soon as possible.

Application will be made for the New Ordinary Shares to be admitted to listing on the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission of the New Ordinary Shares will become effective and dealings in the New Ordinary Shares will commence by 8.00 a.m. on 18 July 2016 (whereupon an announcement will be made by the Company to a Regulatory Information Service).

The New Ordinary Shares will, in aggregate, represent approximately 50 per cent. of the Company's issued Ordinary Shares following Admission of the New Ordinary Shares. New Ordinary Shares issued through the Firm Placing will represent approximately 34 per cent. of the Enlarged Share Capital and New Ordinary Shares issued through the Placing and Open Offer will represent approximately 17 per cent. of the Enlarged Share Capital. The above calculations assume that no Ordinary Shares are issued as a result of the exercise of any options or awards under the Sepura Share Schemes between the Latest Practicable Date and the Record Time.

Following the issue of New Ordinary Shares to be allotted pursuant to the Capital Raising, Qualifying Shareholders who take up their full Open Offer Entitlements will suffer a dilution of approximately 34 per cent. to their interests in the Company due to the Firm Placing element of the Capital Raising.

Qualifying Shareholders who do not take up any of their Open Offer Entitlements will suffer a dilution of approximately 50 per cent. to their interest in the Company.

6.1 The Firm Placing

Liberum, as agent of the Company, has firm placed the Firm Placing Shares at the Offer Price pursuant to the Underwriting Agreement. The Firm Placing Shares, which represent 67 per cent. of the New Ordinary Shares and approximately 34 per cent. of the Enlarged Share Capital have been placed with certain institutional investors (the 'Firm Placees'). The Firm Placing Shares are not subject to clawback and are not part of the Placing and Open Offer. The Firm Placing is subject to the same terms and conditions as the Placing and Open Offer.

The Firm Placing will raise gross proceeds of approximately £43.5 million.

The Firm Placing Shares will be issued and credited as fully paid and will rank pari passu in all respects the Existing Ordinary Shares.

6.2 The Placing and Open Offer

Liberum, as agent of the Company, has also made arrangements to conditionally place the Placing Shares with new and existing institutional investors at the Offer Price. The Placing Shares represent approximately 34 per cent. of the New Ordinary Shares and 17 per cent. of the Enlarged Share Capital. The Placing Shares will be subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer. Subject to the waiver or satisfaction of the conditions and the Underwriting Agreement not being terminated in accordance with its terms, any Open Offer Shares not subscribed for under the Open Offer will be issued to Placees and/or the subscribers procured by Liberum, with the net proceeds of the Placing being retained by Sepura.

Open Offer Entitlements

Qualifying Shareholders have the opportunity under the Open Offer to subscribe for New Ordinary Shares at the Offer Price, payable in full on application and free of expenses, pro rata to their existing

shareholdings, on the following basis:

1 Open Offer Share for every 3 Existing Ordinary Shares

held by them and registered in their names at the Record Time. Fractions of Ordinary Shares will not be allotted and each Qualifying Shareholder's entitlement under the Open Offer will be rounded down to the nearest whole number. Fractional entitlements to New Ordinary Shares will be aggregated and will ultimately accrue for the benefit of the Company.

Qualifying Shareholders are also being offered the opportunity to subscribe for Excess Shares in excess of their Open Offer Entitlements pursuant to the Excess Application Facility as described below.

Excess Application Facility

Qualifying Shareholders may apply to subscribe for Excess Shares using the Excess Application Facility, should they wish. Qualifying Non-CREST Shareholders wishing to apply to subscribe for Excess Shares may do so by completing the relevant sections on the Application Form. Qualifying CREST Shareholders who wish to apply to subscribe for more than their Open Offer Entitlements will have Excess Open Offer Entitlements credited to their stock account in CREST and should refer to paragraph 4.3 of Part IV (Terms and Conditions of the Capital Raising) of the Prospectus for information on how to apply for Excess Shares pursuant to the Excess Application Facility.

The Excess Application Facility will comprise Open Offer Shares that are not taken up by Qualifying

Shareholders under the Open Offer pursuant to their Open Offer Entitlements, which have been clawed back from Placing Placees. Qualifying Shareholders' applications for Excess Shares will, therefore, be satisfied only to the extent that corresponding applications by other Qualifying Shareholders are made for less than their pro rata Open Offer Entitlements. If there is an over-subscription resulting from excess applications, allocations in respect of such excess applications will be scaled down at the absolute discretion of the Board in consultation with Liberum.

Further information on the Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, are set out in Part IV (Terms and Conditions of the Capital Raising) of the Prospectus and, where relevant, in the Application Form.

Shareholders should be aware that the Open Offer is not a rights issue. As such, Qualifying Non-CREST Shareholders should note that their Application Forms are not negotiable documents and cannot be traded. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements and Excess Open Offer Entitlements will be admitted to CREST, and be enabled for settlement, the Open Offer Entitlements and Excess Open Offer Entitlements will not be tradable or listed and applications in respect of the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. New Ordinary Shares for which application has not been made under the Open Offer will not be sold in the market for the benefit of those who do not apply under the Open Offer and Qualifying Shareholders who do not apply to take up their entitlements will have no rights nor receive any benefit under the Open Offer. Any New Ordinary Shares which are not applied for under the Open Offer entitlements and Excess Open Offer Entitlements will be allocated to Placing Placees and/or other subscribers procured by Liberum or, failing which, to Liberum subject to the terms and conditions of the Underwriting Agreement, further details of which are set out in paragraph 5(A) of Part XI (Additional Information) of the Prospectus.

The Placing and Open Offer will raise gross proceeds of approximately £21.5 million.

6. Current trading and prospects

The Company has also published its 2016 Unaudited Preliminary Results today.

As disclosed in the 2016 Unaudited Preliminary Results, the Group's core TETRA business delivered a record number of devices and the Group closed the year with a record backlog of €75 million. The strategic acquisition of Teltronic, in May 2015, significantly expanded the Group's geographical footprint in Latin America and enabled the Group to capitalise on further exciting early opportunities for TETRA in North America, including the award of New York City Transit's "Notice to Proceed" for deployment of a Sepura TETRA network. The Group also completed a multi-year development programme on its "Next Generation" radio, the first TETRA terminal to incorporate multi-bearer capabilities, thereby offering customers a flexible platform which has the ability to support both TETRA and emerging LTE technologies. The initial benefits of these, and other investments made by the Group during the 2016 Financial Year, are already being realised and the Directors believe that they will make a significant contribution to the Group's future financial performance.

After four years of rapid growth a programme is underway to drive operational efficiencies, improve cash management and review certain aspects of the Group's standard terms of business which could shorten the working capital cycle. As a result the Board has launched a series of initiatives which will adjust the business model to focus on more immediate cash generating activities and include:

· Improving sales phasing - the Group's revenue profile has historically been heavily weighted to the year-end, reducing visibility of earnings and necessitating increased inventory levels to support potential business. Reducing the Group's emphasis on year-end revenue by matching orders received from the Group's commercial partners to the delivery and payment schedules agreed with their end-users and placing restrictions on the approval of discounting arrangements and credit terms will provide better visibility of earnings and margin improvement;

· Aligning manufacturing timescales with customer delivery schedules - the Group has typically incurred certain costs at the start of the contract period and recognised the associated revenues at that point. The Group intends to alter the Teltronic manufacturing process to manage working capital more effectively. As a result, product manufacturing will occur later in the contract period than is currently the case with a resultant impact on the timing of revenue being recognised. Aligning manufacturing timescales more closely to customer requirements will reduce stock holding and corresponding working capital requirements, shortening the Group's working capital cycle; and

· Reducing credit risk profile - active management of the Group's exposure of credit risk (including, where appropriate, aligning payment terms more closely to contract performance and/or product delivery and declining business until credit can be confirmed) will reduce exposure to delayed payment or non-payment of customer invoices.

While these initiatives will result in a one-off shift of revenue for the 2017 Financial Year, the Company will benefit from working capital improvement and a better alignment of profitability to cash flows.

In addition, the Board has undertaken a review of the Company's DMR strategy, where it believes that it will not be possible to achieve further market penetration without significant additional investment. It as therefore decided to withdraw from its DMR operations, instead allocating the Company's resources to opportunities which are more immediately revenue and cash generative within the TETRA market, such as those within the North American region and the transportation sector.

The Board expects that, together with business model initiatives described above, the aggregate negative impact on 2017 Financial Year revenue and Group adjusted EBITDA will be €24.0 million and €11.0 million respectively. Accordingly, the Board considers that adjusted EBITDA for the 2017 Financial Year will be lower than its previous expectations.

The Board believe that, despite these measures having a one-off impact on short-term financial performance for the 2017 Financial Year, they are in the best interests of the Company and will ensure a more robust business going forward which delivers better visibility of revenue and improved cash conversion.

7. Dividend policy of the Group

The Company paid a dividend of 1.71p per Ordinary Share (2014: 1.41p) on 9 October 2015, to Shareholders on the register at the close of business on 27 August 2015, giving a total dividend for the 2015 Financial Year of 2.40p per Ordinary Share (2014: 2.0p) representing a 20 per cent. increase in the total dividend paid for the 2014 Financial Year. The Company also paid an interim dividend of 0.79p (H1/15: 0.69p) on 8 January 2016 to those Shareholders on the register at the close of business on 3 December 2015, representing a 14 per cent. increase on the 2015 interim dividend.

In view of the proposed Capital Raising, the Board considers it appropriate to suspend the payment of dividends until further notice and will therefore not be recommending a final dividend in respect of the 2016 Financial Year. The total dividend in respect of the 2016 Financial Year will therefore be the interim dividend of 0.79p (2015: 2.40p).

The Board recognises that dividends are an important component of total shareholder returns and intends to resume dividend payments in the future once the financial position of the Group permits and subject to an appropriate level of dividend cover.

8. Related Party Participations

Henderson Global Investors Limited and Schroders Investment Management Limited are each related parties of the Company for the purposes of Chapter 11 of the Listing Rules, as a result of either: (i) being entitled to exercise, or to control the exercise of over 10 per cent. of the votes able to be cast at general meetings of the Company; or (ii) being so entitled during the 12 month period prior to the date of this announcement. Henderson Global Investors Limited and Schroders Investment Management Limited have each agreed to subscribe for 38,683,682 and 15,781,093 New Ordinary Shares, respectively, at the Offer Price, under and on the terms and conditions of the Firm Placing and the Placing. Such subscriptions by each of Henderson Global Investors Limited and Schroders Investment Management Limited are classified as related party transactions for the purposes of Chapter 11 of the Listing Rules.

Resolutions will be proposed at the General Meeting which approve the participation by each of Henderson Global Investors Limited and Schroders Investment Management Limited in the Firm Placing and the Placing on the terms outlined above, as related party transactions. Henderson Global Investors Limited and Schroders Investment Management Limited will each not vote on the resolution applicable to them and have also each undertaken to take all reasonable steps to procure that their respective associates (as defined in the Listing Rules) will also not vote on the resolution applicable to them.

In addition, Jonathan Green is a related party of the Company for the purposes of Chapter 11 of the Listing Rules, as a result of having been entitled to exercise, or to control the exercise of over 10 per cent. of the votes able to be cast at general meetings of the Company during the 12 month period prior to the date of this announcement. Jonathan Green has agreed to subscribe for 4,285,714 New Ordinary Shares, at the Offer Price, under and on the terms and conditions of the Firm Placing and the Placing. Jonathan Green's subscription for New Ordinary Shares is classified as a smaller related party transaction for the purposes of Chapter 11 of the Listing Rules.

9. General Meeting

The Capital Raising is subject to a number of conditions, including Shareholders' approval to grant the Directors authority to allot and issue the New Ordinary Shares as if the applicable statutory pre-emption rights did not apply at a discount of 53 per cent. to the Closing Price of 75 pence/share on 24 June 2016, and of the participation by the Related Parties in the Firm Placing and the Placing as related party transactions for the purposes of Chapter 11 of the Listing Rules.

A General Meeting will be convened to be held at the offices of Hogan Lovells International LLP, Atlantic House, 50 Holborn Viaduct, London EC1A 2FG at 10.00a.m. on 15 July 2016.

The Sepura Directors who hold interests in Ordinary Shares have irrevocably undertaken to vote in favour of the Resolutions to be proposed at the General Meeting to approve the Capital Raising in respect of a total of 8,361,287 Ordinary Shares, representing, in aggregate, approximately 4.5 per cent. of Sepura's issued share capital.

10. Recommendations and voting intentions

The Board believes that the Capital Raising and the Resolutions, including the Resolutions relating to the Related Party Participations, are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends that you vote in favour of the Resolutions, as the Sepura Directors who are Sepura Shareholders intend to do in respect of their own beneficial holdings.

The Board, which has been so advised by Liberum, considers the terms of the Related Party Participations to be fair and reasonable as far as Shareholders as a whole are concerned. In providing this advice to the Board, Liberum has taken into account the Board's commercial assessment of the Related Party Participations.

11. Further information

Further details in relation to the Capital Raising will be set out in the Prospectus which is expected to be published today. Sepura Shareholders should refer to the risk factors set out in the Prospectus.