Trading Update and Financial Position

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Sepura plc

("the Company" or "the Group")

Trading update and financial position

Sepura plc, a leading global provider of critical communications solutions, today issues the following update:

Highlights

§ Revenues of €191 million for the period and record closing order backlog of €75 million

§ Adjusted EBITDA of €17 million

§ Closing net debt of €119 million

§ Ongoing discussions with stakeholders regarding liquidity and capital structure

Trading update

The Company expects to report record revenues of €191 million, up 45% over the prior year. Organic revenues increased by 10% to €145 million, reflecting robust demand in the Group's core markets. Teltronic contributed €46 million of revenues since its acquisition at the end of May 2015. As announced on 4 April 2016, purchase orders for two significant opportunities were not received before the year end cut-off which adversely impacted both Teltronic's and the Group's reported revenues and adjusted EBITDA for the period. The Company expects to report adjusted EBITDA of €17 million, flat on the prior year and in-line with the statement released on 4 April 2016.

The integration of Teltronic has been successful with significantly higher cost synergies than originally expected, contributing €4 million of EBITDA in FY16 and expected to contribute €7 - 8 million in FY17. Significant new contract wins in Latin America and Europe, together with the "Notice to Proceed" issued by New York City Transit for the procurement of a Sepura TETRA solution, demonstrate the strategic rationale of the acquisition.

The Company expects to report net debt of €119 million, reflecting the delays in purchase orders referred to above, for which inventory had already been procured, and slower than expected receipts from customers who have previously paid to terms. Slower debtor collection is in part a function of the Group's broader geographic diversity with some emerging markets experiencing challenging economic conditions which have impacted cash flows. The Company also incurred further costs relating to the Teltronic acquisition and additional investment to accelerate cost synergies.

Capital structure

The Company's current net debt and consequential leverage position is largely the result of the working capital expansion referred to above. The working capital position is expected to significantly ease during this financial year. However, the Company is subject to short term cash constraints which the board expects will require an extension of its banking facilities and a waiver of a possible covenant breach at 30 June 2016.

Discussions with the Company's debt providers regarding the Company's liquidity requirements and the possibility of covenant breaches are ongoing. The Company has also commenced discussions with major shareholders regarding an equity capital raise of up to £50 million to reduce leverage and provide the working capital to support the development of the business.

Outlook

The Board maintains its expectations for adjusted EBITDA for FY17. This is supported by the additional contribution from the delayed orders together with a full year of synergy benefits which will drive lower operating costs for the combined business in FY17 and a recovery in product margins now that the Saudi contract has completed. These factors offset the lower expectations for Applications and DMR. With the growing momentum for the TETRA business, particularly in North America, the Company will be increasing its focus on this over other areas such as DMR.

Commenting on today's announcement, Gordon Watling, Chief Executive, said:

"Despite a disappointing end to the year, our business is fundamentally sound with a record order book and a strong market position. In light of current working capital constraints the Board is committed to securing an appropriate capital structure which will provide short-term working capital liquidity and the financial flexibility to convert our current sizeable pipeline."

"We will see the full benefits of our FY16 investments in people, premises and technology in the coming year and are confident that we can achieve our targets for FY17 with a focus on improving cash generation."

- Ends -

Further information:

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 from those anticipated. Nothing in this Announcement should be construed as a profit forecast. No undertaking is given to update any forward-looking statement whether as a result of new information, future events or otherwise.

Important Notice:

This Announcement is for information only and does not constitute an offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities or investments or otherwise engage in any investment activity in any jurisdiction, including without limitation, the United Kingdom, the United States, Canada, Australia, Japan or South Africa. Any failure to comply with this restriction may constitute a violation of the securities laws of such jurisdiction. Persons needing advice should consult an independent financial adviser.

This Announcement and the information contained herein do not constitute an offer of securities in the United States. The securities referred to in this Announcement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration under the Securities Act or pursuant to an exemption from, or a transaction not subject to, such registration requirements. Sepura has not registered and does not intend to register the offering of any securities in the United States or to conduct a public offering of any securities in the United States.

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. Sepura's proven track record of focussing on exciting high growth opportunities, product innovation and delivering quality and customer service was recognised in April 2015 with the award of the prestigious Queen's Award for Enterprise: International Trade.

Headquartered in Cambridge, England and with over 700 employees, Sepura was admitted to the Official List of the London Stock Exchange on 3 August 2007.

www.sepura.com