SEPU.L Regulatory News (SEPU)

Sepura plc

("the Company" or "the Group")

Trading update

Sepura plc, a leading global provider of critical communications solutions, today issues the following trading update for the year ended 1 April 2016.

Highlights

· Revenues of €190-200 million for the period

· Adjusted EBITDA lower than expectations at €16 million - €20 million

· Significant new Systems and Devices orders slipped into Q1 FY17

· DMR and Applications behind expectations

· Adverse foreign exchange of €2.6 million

· Teltronic performing strongly with synergies ahead of forecast

· Sepura TETRA devices business remains robust

· Order backlog increased significantly to over €70 million

· Includes New York City Transit TETRA solution

· FY17 expectations maintained

· Working capital impact of contract delays plus delayed receipts results in increase in net debt to approximately €120 million

· Working capital will unwind significantly during FY17

Trading update

The Company expects to report revenues of €190-200 million for the period.

Consistent with previous years, the Group's revenue profile continues to be significantly weighted to the second half of the year with particularly strong trading in the final weeks of the year. Two significant opportunities did not close before the year end cut-off which adversely impacted EBITDA. These are expected to close early in FY17. Performance in the newer areas of DMR and Applications was below expectations in H1 and this continued into H2. In addition profitability was impacted by a €2.6 million adverse $:€ foreign exchange movement.

The overall performance of Teltronic has been ahead of expectations and the integration of the business has been successful with significantly higher cost synergies than were originally expected (€4 million in FY16). In addition significant new contract wins in Latin America, North America and Europe demonstrate the strategic rationale of the acquisition.

On 22 February New York City Transit announced its intention to procure a Sepura TETRA solution and a "Notice to Proceed" has subsequently been issued to Sepura's partner.

The Board maintains its expectations for adjusted EBITDA for FY17. This is driven 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 focus in this over newer areas such as DMR.

The increase in net debt has arisen from an expansion in working capital together with further costs relating to the Teltronic acquisition and additional investment to accelerate cost synergies. The working capital expansion accounts for the majority of the increase and is primarily as a result of delays in contract awards and slower debtor collection. Contract delays impact the timing of receipts with inventory costs already having been incurred. Slower debtor collection is in part a function of the Group's broader geographic diversity with some of these markets experiencing more challenging economic conditions.

As a result the Company's year end net debt position is significantly higher than market expectations at approximately €120 million. The working capital expansion is expected to significantly unwind during the new financial year. The Board retains its medium term target of net debt to EBITDA of around 2x. The Board has held discussions with the Company's debt providers regarding the Company's liquidity requirements and the possibility of covenant breaches. The Company's debt providers ‎have waived any potential breach of year end covenants.

The Company will provide a further update once the year end close process has been completed.

- Ends -

Further information:

Cautionary statement:

This trading statement 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 trading statement 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.

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