1 May 2015

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, as amended, and is not a prospectus.  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). 

The Prospectus will be sent to Sepura shareholders 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: www.sepura.com.

Sepura PLC

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

PROPOSED ACQUISITION OF TELTRONIC

and

FULLY UNDERWRITTEN EQUITY CAPITAL RAISE OF £60.5 MILLION

Sepura plc, a leading global provider of critical communications solutions, today announces that it has entered into a conditional agreement to acquire the entire issued share capital of Teltronic, S.A.U.  ("Teltronic") for €127.5 million (the "Acquisition").

Highlights

·  Reinforces the Group's position as a leading global provider of critical communications solutions, strengthening its position in Latin America and the US.

·    Immediately enhancing Adjusted Fully Diluted EPS and significantly enhancing it in the first full year after Completion.

·   Increased scale enabling the Group to deliver larger projects and provide further improved visibility of earnings.

·    Continued diversification of revenues into commercial markets with the addition of significant transportation revenue streams.

·    Enhances product offering and technical breadth as the analogue to digital migration accelerates.

About Teltronic

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 business covers the entire Professional Mobile Radio (''PMR'') value chain, including network infrastructure, terminals and command and control centres. The company operates in over 50 countries serving customers based primarily in Latin America, North America and the EMEA region. 

About the Acquisition and the Capital Raising

Sepura has agreed to acquire the entire issued share capital of Teltronic for €127.5 million, to be financed by the partial draw down under its new debt facilities of €120 million and the net proceeds of a fully underwritten Firm Placing of 37,389,203 New Ordinary Shares at 130 pence per New Ordinary Share and Placing and Open Offer of 9,149,258 New Ordinary Shares at 130 pence per New Ordinary Share to raise £56.9 million, net of expenses (the "Capital Raising"). The net proceeds from the Capital Raising will be used to fund the Acquisition and pay the costs and expenses associated with the Capital Raising and Acquisition.

Teltronic generated revenue of €62.9 million and adjusted operating profit of €8.4 million for the year ended 31 December 2014, giving a 13.4% adjusted operating profit margin. This represented 29.7% and 59.7% year-on-year growth for revenue and adjusted operating profit respectively over the year ended 31 December 2013. Juan Ferro, currently CEO of Teltronic, will lead the enlarged systems and network business of Sepura, along with his senior team.

Gordon Watling, Chief Executive Officer of Sepura, said:

"This is a highly complementary and transformational acquisition which will be immediately earnings enhancing. It brings together two of the market's growing players, to create a market leading digital Professional Mobile Radio company, with a broader offering and significantly enhanced capabilities.

Teltronic's business will diversify our geographical reach, growing our footprint in Latin America and enhancing our existing presence in North America, specifically the US; expanding and diversifying our revenue streams accordingly.

As the number and scale of digital radio networks around the world increases, we will have the breadth of portfolio and financial strength to compete for significant new contracts at a high level."

As a result of its size, the Acquisition constitutes a Class 1 transaction under the Listing Rules and is therefore conditional, inter alia, upon the approval of Sepura Shareholders at the General Meeting.

A combined Class 1 circular and prospectus (the "Prospectus") containing further details of the Acquisition and the Capital Raising and containing the notice convening the General Meeting (to be held at 10.00 a.m. on 21 May 2015 at the offices of Hogan Lovells International LLP, Atlantic House, 50 Holborn Viaduct, London, EC1A 2FG) will be sent to Sepura Shareholders (other than Sepura Shareholders with a registered address in the United States or the Restricted Jurisdictions) as soon as practicable. 

Capitalised terms not defined in this announcement have the meaning given to them in the Prospectus.

Capital Raising Statistics

(1)  On the assumption that no further Ordinary Shares are issued as a result of the exercise of any options under the Sepura Share Schemes between 30 April 2015 (being the latest practicable date prior to the date of this announcement) and Admission.

Indicative timetable

About 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, through organic product development and the acquisition of complementary products and technologies. The successful execution of this strategy has transformed the Group from being a UK-focused terminals supplier into a geographically and technologically diverse supplier of complete mission critical communications solutions.

Headquartered in Cambridge, England and employing over 400 staff, Sepura was admitted to the Official List of the London Stock Exchange on 3 August 2007.

www.sepura.com

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.

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

Nplus1, which is authorised and regulated by the 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  as clients of Nplus1 in relation to the Capital Raising, and will not be responsible for providing the protections afforded to Nplus1 clients, nor for giving advice in relation to the Capital Raising, or any arrangement referred to in, or information contained in, this announcement.

Oakley Capital is authorised and regulated by the FCA. Oakley Capital is acting exclusively for Sepura and no-one else in connection with the Acquisition and will not regard any other person as its client in relation to the Acquisition, and will not be responsible to anyone other than Sepura for providing the protections afforded to clients of Oakley Capital, nor for giving advice in connection with the Acquisition, or any other matter referred to in this announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on Liberum, Nplus1 or Oakley Capital under FSMA or the regulatory regime established thereunder, neither Liberum, Nplus1 nor Oakley Capital accepts any responsibility 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 any of them, or on behalf of them, in connection with Sepura, the Group, the new Ordinary Shares, the Acquisition, the Capital Raising and Admission. 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, each of Liberum, Nplus1 and Oakley Capital 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 any of them might otherwise have in respect of this announcement or any statement purposed to be made by them, or on their behalf, in connection with Sepura, the Group, or the arrangements described in this announcement.

Neither Liberum nor Nplus1 nor any of their representatives makes any representation to any offeree or purchaser of the New Ordinary Shares regarding the legality of an investment in the New Ordinary

Certain statements contained in this announcement constitute 'forward looking statements'. 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' or 'should' or, in each case, their negative or other variations or comparable terminology. Investors should specifically consider the factors identified in the Prospectus, which could cause actual results to differ, before making an investment decision. Such forward looking statements involve 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 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. 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. 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. Persons needing 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, you should seek advice from another appropriate authorised independent adviser.

1.   Introduction to the Acquisition and the Capital Raising

Sepura today announces that it had entered into a conditional agreement to acquire 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 Professional Mobile Radio (''PMR'') value chain, including network infrastructure, terminals and command and control centres. The Company operates in over 50 countries serving customers based primarily in Latin America, the EMEA region and North America.

Sepura proposes to finance the Acquisition through partial draw down under its new debt facilities of €120 million (comprised of a €50 million term loan and a €70 million revolving loan facility) and the net proceeds of the Capital Raising, being approximately £56.9 million. The Capital Raising has been fully underwritten by Liberum.

Due to the size of the Acquisition in relation to the Company, the Acquisition is classified as a Class 1 transaction for the purposes of the Listing Rules, and therefore requires the approval of Sepura Shareholders. The associated Capital Raising also requires the approval of Sepura Shareholders. Accordingly, a General Meeting will be convened for 10.00 a.m. on 21 May 2015 at the offices of Hogan Lovells International LLP, Atlantic House, 50 Holborn Viaduct, London EC1A 2FG to allow  Sepura Shareholders to consider, and if thought fit, pass the Resolutions to approve the Capital Raising and the Acquisition.

2.   Summary 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, through organic product development and the acquisition of complementary products and technologies. The successful execution of this strategy has transformed the Group 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 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 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 regional partners that sell, and provide local support for, its products.

For the year ended 28 March 2014, revenue was €116.6 million and the six months ended 26 September 2014 saw revenues increase by 18 per cent. year on year to €54.5 million. Sepura's focus on higher margin activities led to an increase of 19 per cent. in the Group's underlying operating profit to €12.5 million (2013: €10.5 million) for the year ended 28 March 2014 and of 350 per cent. to €2.7 million (H1/2014: €0.6 million) for the six months ended 26 September 2014 compared to the previous financial year and six month period respectively. Underlying diluted earnings per share for the year ended 28 March 2014 were 8.4 cents (2013: 7.8 cents).

3.   Summary information on Teltronic

The Teltronic Group provides integrated solutions for mission critical communication activities including voice and data, 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. Teltronic has developed a comprehensive range of customer-tailored products and solutions across three broad areas, being:

·    Network infrastructure - Teltronic's network infrastructure solutions, developed under the NEBULA commercial brand name, provide digital communications infrastructure for PMR networks based on the TETRA open standard. Teltronic's networks provide excellent coverage, security and reliability using a platform designed for efficient implementation and cost-effective scalability. The infrastructure supports a broad range of frequency bands and benefits from cost effective outdoor base stations.

·  Terminals - In addition to providing mobile and hand-portable terminals, Teltronic also provides on-board equipment, for the public safety and transportation industry, such as on trains and buses, with the most advanced functionality currently available in the market.

·    Command and Control Centres - Teltronic provides highly adaptable information systems that centralise voice, media and peripheral systems enabling fast and efficient management of communications and information for mission critical activities. Teltronic's command and control centres have the ability to integrate voice and data communications. In addition to the provision of IT equipment, Teltronic offers after-sales service worldwide and provides requisite software licences.

For the year ended 31 December 2014, Teltronic generated revenue of €62.9 million and adjusted operating profit of €8.4 million, giving an 13.4 per cent. adjusted operating profit margin. This represented 29.7 per cent. and 59.7 per cent. year-on-year growth for revenue and adjusted operating profit respectively over the year ended 31 December 2013.

4.   Background to and reasons for the Acquisition

The Directors believe the acquisition of digital radio peer Teltronic will help Sepura to meet its core strategic objectives, being:

·      scale and visibility;

·      global reach;

·      end market diversity;

·      enhanced product offering and technical breadth; and

·      financial enhancement to Sepura shareholders.

The Directors believe that the Acquisition represents a significant opportunity for the Group.

4.1 The acquisition of Teltronic is expected to increase Sepura's scale and visibility

The Directors believe that the Acquisition is significant for Sepura in that it creates an Enlarged Group with significant scale and breadth that is positioned to further capitalise on the continuing migration of government and commercial organisations from analogue to digital professional mobile radios.

The acquisition of Teltronic by Sepura will create an Enlarged Group of significantly larger size than the existing Sepura business. Assuming that the Acquisition of the Teltronic Group and the Capital Raising had occurred at the beginning of the relevant financial year, the revenue, operating profit and net profit of the Enlarged Group for the period ended 28 March 2014 would have been on a pro forma basis €179.5 million, €24.2 million and €19.7 million, respectively. In addition, assuming that the Acquisition of Teltronic, the entry into the New Facilities and the Capital Raising had occurred on 26 September 2014, the Enlarged Group would, as at that date, have had net assets on a pro forma basis of €152.1 million and a market capitalisation of £241 million (assuming the Offer Price multiplied by the number of Ordinary Shares in issue immediately post Admission), which is 34 per cent. larger than Sepura's market capitalisation as at 30 April 2015, being the last practicable date immediately prior to publication of this announcement.

* Pro-forma illustrates the effect of the Acquisition, the Capital Raising and the New Facilities on Sepura Group's net assets as if they had occurred on 26 September 2014 and the effect of the Acquisition, the Capital Raising and the New Facilities on Sepura Group's income statement as if they had occurred at the beginning of the year ended 28 March 2014. Pro-forma comprises Sepura FY to March 2014 and Teltronic FY to December 2014.

The Directors believe that this enhanced scale will assist the Enlarged Group to increase market share in their existing markets, enter into new markets and win new customers which might not have otherwise been accessible without the Acquisition having taken place. For instance, the Directors believe that the Group's addressable market in public safety will be enlarged by the Acquisition as new governmental organisations will have increased confidence by sourcing their products from a leading global supplier.

Sepura has historically been required to enter into performance bond arrangements with banks or other financial institutions, guaranteeing the fulfilment of particular contracts of supply of products to its customers. On acquisition of Teltronic, the Enlarged Group is expected to be of significantly larger size and scale and the Directors believe that this should reduce the requirements placed on it to enter into contract performance bonds to secure customer orders.

The Directors believe that the Acquisition will provide increased visibility of the Enlarged Group's future revenues. Teltronic's contracts to develop and install networks for its customers typically extend over several financial years, contributing to a contracted backlog of €33.8 million at 31 December 2014, which the Directors expect to be recognised as revenue in future financial periods. Combined with Sepura's contracted backlog of €13.1 million at 28 March 2014, this provides a pro-forma contracted backlog of €47 million for the Enlarged Group, which provides enhanced visibility on the Enlarged Group's future revenue. The Directors therefore expect the Enlarged Group's backlog to represent a greater proportion of forecast revenues than the proportion Sepura's backlog currently represents of its forecast revenues on a standalone basis.

A typical PMR network will be operational for at least 20 years. In addition to the initial capital sale of infrastructure and radios, customers require regular supplies of replacement parts and ancillaries, such as batteries, which generate strong recurring revenues over the lifetime of the network. New opportunities are also created as the network expands, new users join the network or existing users replace ageing radios with the latest technology. Teltronic's installed base of operational PMR networks is therefore expected to provide incremental opportunities for Sepura to provide its own products to Teltronic's existing customers. Similarly, Sepura's specialism in terminals is expected to provide further incremental cross-selling opportunities.

4.2 The acquisition of Teltronic is expected to increase Sepura's global reach and in doing so diversify its revenues geographically

The Directors believe that the countries in which Teltronic generates the majority of its revenues are complementary to those in which the Group currently operates and that the Enlarged Group will benefit from a greater diversification of geographic revenue source. In particular, the Directors believe that the expansion of Sepura's geographic footprint across Latin America, together with an enhanced presence in the US TETRA market where Teltronic secured the first contract to provide a TETRA network, presents significant growth opportunities for Sepura.

For the financial year ended 28 March 2014, 83 per cent. of Sepura's Group revenues were generated in the EMEA region, 4 per cent. in Latin America and 1 per cent in North America. By contrast, for the financial year ended 31 December 2014, 15 per cent. of Teltronic's revenues were generated in the EMEA region, 73 per cent. in Latin America, 10 per cent. in North America and the remainder in the Asia Pacific region. It is expected that on completion of the Acquisition, the Enlarged Group's revenues will comprise (on a pro-forma basis) 59 per cent. in the EMEA region, 28 per cent. in Latin America, 9 per cent. in the Asia Pacific region and 4 per cent. in North America.

4.3 The acquisition of Teltronic is expected to provide end market diversity

Sepura has traditionally had a strong presence in the government and public safety market vertical, with key customers being police, fire and ambulance services. For the financial year ended 28 March 2014, traditional government and public safety customers accounted for 71 per cent. of Sepura revenues and commercial customers accounted for 29 per cent. of Group revenues (of which 6 per cent. were derived from transport and 23 per cent. from other commercial industries), although the mix of products purchased by commercial PMR users has historically commanded higher margins than those purchased by public safety users.

Teltronic has a greater focus on commercial customers, which represented 39 per cent of Teltronic's revenues for the financial year ended 31 December 2014. Public safety customers accounted for approximately 61 per cent. of revenues for the same period. The primary sector contributing to Teltronic's commercial revenues was the transportation sector, which represented 26 per cent. of Teltronic's total revenues, compared to 6 per cent. of Sepura's revenues.

The Directors believe that the Acquisition will diversify Sepura's customer base and increase the weighting of Group revenues to commercial PMR users who typically purchase higher margin solutions. In addition, the Acquisition will provide opportunities to extend Teltronic's more comprehensive transport solutions to Sepura's existing transportation customers. It is expected that on completion of the Acquisition, the Enlarged Group's revenues will comprise (on a pro-forma basis) 67 per cent. in the government and public safety sector, 13 per cent. in the transport sector and the remainder with other commercial industries.

4.4 The acquisition of Teltronic is expected to enhance Sepura's product portfolio and technical breadth

The Directors believe that Teltronic's product offering is complementary to Sepura's and that the Acquisition will broaden and strengthen the product portfolio and technical breadth of the Enlarged Group.

The Group has invested over €150m in research and development in the last 10 years, enabling it to secure a competitive advantage by being ''first to market'' with a wide range of innovative product features and functions for its terminals portfolio. Sepura's terminals portfolio includes radios designed for specialist users, such as surveillance operatives, and those required to use devices certified with IECEx/ATEX standard V6, which Teltronic does not offer, while Teltronic has developed specialist solutions for the transportation sector that Sepura does not currently offer.

By contrast, Teltronic's research and development has focussed on its network infrastructure including the integration of wireless broadband technology and LTE communications technology with its existing products. Teltronic's infrastructure operates in a wider range of frequency bands than Sepura's and incorporates features that have yet to be developed for Sepura's network infrastructure offering. Teltronic's offering has particular specialisation in infrastructure and systems (including P25 systems capability) and a comprehensive range of transportation solutions and command & control applications.

Combining Sepura's terminals portfolio and Teltronic's network infrastructure portfolio will therefore enable the Enlarged Group to offer a broader and deeper range of products and solutions to its customers. The Enlarged Group will be a market leader in TETRA terminals, with a broad  infrastructure offering and accelerated introduction of LTE / P25 products and a DMR product portfolio targeted at Teltronic's customers in the Latin America region.

4.5 The acquisition of Teltronic is expected to deliver financial enhancement to Sepura Shareholders

Financial enhancement through attractive synergies from Acquisition

The Directors believe that the Acquisition will produce a number of synergies for the Enlarged Group, building to a pre-tax cost saving of approximately €3 million per annum in the first full financial year following Completion.

The Board expects that the integration process and the realisation of synergies will result in non-recurring costs of approximately €1.9 million incurred during the same period.

The Board is confident that the integration of Teltronic into the Sepura Group can be achieved without undue disruption to the underlying operations of either business whilst ensuring its strong product offering and excellent customer service is maintained. Over the longer term, the Board is confident of achieving enhanced operational benefits including the opportunity for purchasing and development efficiencies between Sepura and Teltronic and cross-selling of products across customer and geographical markets.

The anticipated cost savings outlined above are contingent on Completion and could not be achieved independently. The estimated synergies reflect both the beneficial elements and the relevant cost.

Financial enhancement through attractive financial returns for Sepura Shareholders

The Board believes that, taking into account the business and prospects of the Enlarged Group, the expected synergy benefits and associated costs of achieving them, the impact of the Capital Raising and the extension of the Company's debt facilities (as described in more detail in paragraph 6 below), the Acquisition will be immediately enhancing to Adjusted Fully Diluted EPS and significantly enhancing to Adjusted Fully Diluted EPS in the first full financial year following Completion.

5.   Key terms of the Acquisition

Under the terms of the Acquisition, the Company will acquire the entire issued share capital Teltronic on a debt-free basis, for €127.5 million.

The Acquisition Agreement, when taken together with the Management Warranty Deed, contains customary warranties, undertakings and conditions for a transaction of this nature. Completion of the Acquisition is conditional upon certain conditions being satisfied, including:

·    the Resolutions being passed by Shareholders to approve the Acquisition and the Capital Raising; and

·    admission of the New Ordinary Shares to the Official List of the UKLA, trading on the London Stock Exchange becoming effective.

Furthermore, the terms of the Acquisition Agreement provide that if the Acquisition Agreement is terminated as a result of certain milestones in the Expected Timetable of Principal Events failing to be met in accordance with that timetable, the Acquisition Agreement may be terminated by the Seller and Sepura may be liable for a break fee of €2 million and, in certain circumstances, contractual damages (such break fees are further described in the Prospectus).

6. Financing the Acquisition

The Company proposes to finance the Acquisition through a combination of:

·    Debt Facilities: the Group has entered into a €50,000,000 term loan for a term of five years and a €70,000,000 revolving loan facility available for a period of five years with a syndicate of lenders comprised of Barclays Bank PLC, HSBC Bank plc and Santander UK plc. The term loan has been provided to finance the purchase price for the Acquisition, refinance the Sepura Group's existing debt facilities provided by Barclays, refinance certain indebtedness of the Teltronic Group and pay costs and expenses of the Acquisition. The revolving loan facilities have been provided to finance the purchase price for the Acquisition, to pay costs and expenses of the Acquisition, and for the general corporate purposes of the Enlarged Group; and

·    Capital Raising: the proceeds of the Capital Raising of 46,538,461 New Ordinary Shares at 130 pence per New Ordinary Share, being approximately £56.9 million, net of expenses. The key terms of the Capital Raising are set out in paragraph 8 below.

7. Financial effects of the Capital Raising and the Acquisition

The Board expects that the Acquisition will be significantly enhancing to Adjusted Fully Diluted EPS in the first full financial year following Completion.

On a pro-forma basis and assuming the Acquisition, the receipt of the new proceeds of the Capital Raising and the implementation of the New Facilities had taken place on 26 September 2014, the net assets of the Enlarged Group would increase from €75.2 million to €152.1 million as at 26 September 2014.

8. Key terms of the Capital Raising

The Company is proposing to raise approximately £60.5 million (approximately £56.9 million net of expenses) by way of a Firm Placing of 37,389,203 New Ordinary Shares to certain new and existing institutional investors and a Placing and Open Offer of 9,149,258 New Ordinary Shares, representing, in aggregate, 25 per cent. of the Enlarged Share Capital, at an issue price of 130 pence per New Ordinary Share.

The issue price of 130 pence per New Ordinary Share represents an effective 0.8 per cent. discount to the Closing Price of 131 pence per Ordinary Share on 30 April 2015, being the business day prior to this announcement.

8.1 The Firm Placing

Liberum, as agent of the Company, has made arrangements to conditionally firm place the Firm Placing Shares at the Offer Price pursuant to the Underwriting Agreement. The Firm Placing Shares, which represent approximately 20 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 Open Offer.

The Firm Placing will raise gross proceeds of approximately £48.6 million.

8.2 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 5 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.

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 New Ordinary Share for every 15 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.

Excess Application Facility

Qualifying Shareholders may apply to subscribe for Excess Shares using the Excess Application Facility, should they wish. 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 and 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 according to the absolute discretion of the Board in consultation with Liberum.

The Placing and Open Offer will raise gross proceeds of approximately £11.9 million.

Conditions

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 22 May 2015 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 22 May 2015 (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 27 May 2015).

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 applicants (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 22 May 2015 (whereupon an announcement will be made by the Company to a Regulatory Information Service).

Dilution

The New Ordinary Shares will, in aggregate, represent approximately 25 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 20 per cent. of the Enlarged Share Capital and New Ordinary Shares issued through the Placing and Open Offer will represent approximately 5 per cent. of the Enlarged Share Capital.

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 20 per cent. to their interests in the Company.

Qualifying Shareholders who do not take up any of their Open Offer Entitlements will suffer a dilution of approximately 25 per cent. to their interests in the Company.

Substantial shareholder participation

Henderson Global Investors and Schroders plc are each a related party of the Company for the purposes of Chapter 11 of the Listing Rules as a result, in each case, of 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. Henderson Global Investors and Schroders plc have each agreed to subscribe for 3,692,308 and 1,976,924 New Ordinary Shares respectively under, and on the terms and conditions of the Firm Placing, which are classified as smaller related party transactions for the purposes of Chapter 11 of the Listing Rules.

9. Management and Employees

The senior management of both Sepura and Teltronic possess significant experience and success in the PMR market, with the key members of the Teltronic senior management team having between them over 50 years' experience in that market. Following Completion, Sepura plans to integrate the key members of Teltronic's management into Sepura's existing management incentive programme.

The combined knowledge and expertise of the existing Sepura senior management team and the Teltronic senior management team will help Sepura's anticipated growth, assist a smooth transition of Teltronic into the Enlarged Group and assist in the delivery on the Enlarged Group's strategy.  Following Completion, the Board will review and provide appropriate support for the continuing development of the Enlarged Group's management team, as well as considering the appropriate management structure for the Enlarged Group in the longer-term, utilising the skills and experiences of Sepura and Teltronic's existing management teams.

Upon Completion, Teltronic Management will enter into new contracts of employment with Teltronic. It will be a term of such arrangements that Teltronic Management will apply a portion of the bonus payments which they will be entitled to receive from the Seller upon Completion towards the subscription or purchase of shares in Sepura. The aggregate value of such subscriptions or  purchases by Teltronic Management will be approximately €750,000.

10. Current trading and prospects

10.1 Sepura

The Directors expect Adjusted Fully Diluted EPS growth for the financial years ending 27 March 2015 and 1 April 2016 of 15 per cent. and 25 per cent. respectively. The Directors also expect Adjusted Fully Diluted EPS of 9.7 cents for the financial year ending 27 March 2015, (the ''Profit Estimate and Profit Forecast''). This statement represents a profit estimate for the financial year ending 27 March 2015 and a profit forecast for the financial year ending 1 April 2016 and supersedes all previous profit estimates and profit forecasts issued by Sepura for the same periods. Further information in relation to the Profit Estimate and Profit Forecast is provided in Appendix I (Profit Estimate and Profit Forecast of the Sepura Group) to this announcement.

On 16 April 2015, the Company issued the following trading update:

"The Company expects to report revenues of approximately €130 million for the financial year ending 27 March 2015, up 11 per cent. over the prior year and in line with market expectations.

The Company expects to report adjusted diluted earnings per share of 9.7 cents per share for the same period. This earnings performance was achieved notwithstanding material unfavourable foreign exchange variances during the period. Operating cash conversion in the period was approximately 85 per cent., with closing net debt of €1.5m. This closing net debt figure partly reflects delays in receipt of payments due from Greece and the Middle East.

The Company ended the year with a record closing order book, up significantly over the prior year, and boosted by particularly strong momentum in the fourth quarter of the year.''

10.2 Teltronic

Like Sepura, Teltronic operates in the global PMR market. In response to the industry changes, Teltronic has also sought to adapt to meet the need for a single supplier delivering a complete solution to both public safety and commercial users. In that regard, Teltronic has developed a comprehensive range of customer-tailored products and solutions across three broad areas, being network infrastructure, terminals and command and control centres.

11. Dividend Policy of the Enlarged Group

The Board has adopted a dividend policy which takes account of the profitability and underlying growth of the Group in addition to capital requirements, cash flows and distributable reserves, while also recognising that it is appropriate to maintain an appropriate level of dividend cover.

The Company paid a dividend of 1.41 pence per Ordinary Share (2013: 1.17 pence) on 8 August 2014, to shareholders on the register at the close of business on 4 July 2014, giving a total dividend for the year ended 28 March 2014 of 2.0 pence per Ordinary Share (2013: 1.68 pence). This represented a 19 per cent. increase on the previous year's total dividend, reflecting the Group's strong balance sheet, cash generation during the year and increasing confidence in the future.

The Company also paid an interim dividend in respect of the year ending 27 March 2015 of 0.69 pence (H1/14: 0.59 pence) on 7 January 2015 to those shareholders on the register at the close of business on 28 November 2014, representing a 17 per cent. increase on the interim dividend in 2013.

Following the Acquisition, and subject to any unforeseen circumstances, the Directors intend to continue their recommendation of both an interim and final dividend in respect of each financial period in the approximate proportions of one-third and two-thirds respectively of the total annual dividend.

12. General meeting

As a result of its size, the Acquisition constitutes a Class 1 transaction for the purposes of the Listing Rules and is therefore conditional upon the approval of Sepura Shareholders. In addition, in order to effect the Capital Raising, Sepura Shareholders will be requested to grant the Directors with sufficient authorities to issue 46,538,461 New Ordinary Shares. 

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 21 May 2015. The purpose of the General Meeting is to consider and, if thought fit, to approve the Capital Raising and the Acquisition. 

13. Recommendation

The Board believes that the Acquisition, the Capital Raising and the Resolutions 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 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 and the Acquisition in respect of a total of 8,446,637 Ordinary Shares, representing, in aggregate, approximately 6.09 per cent. of Sepura's issued share capital.

14. Further information

Further details in relation to the Capital Raising and the Acquisition 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.

Appendix 1

Profit Estimate and Profit Forecast of the Sepura Group

General

The Directors expect adjusted diluted earnings per share growth of 15 per cent. and adjusted diluted earnings per share of 9.7 cents for the financial year ended 27 March 2015 (the ''Profit Estimate'') and adjusted diluted earnings per share growth of 25 per cent. for the financial year ending 1 April 2016 (the ''Profit Forecast'') (the Profit Estimate and the Profit Forecast being together the ''Profit Estimate and Profit Forecast'').

In the above statement adjusted diluted earnings per share 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 and national insurance contributions in relation to this charge, all net of UK Corporation Tax at the standard rate. Collectively these adjustments are made to derive the underlying operating results of the business. The underlying figures provide a consistent measure of business performance year-to-year thereby facilitating comparison and understanding of the Sepura Group's financial performance. In calculating adjusted diluted earnings per share, the weighted average number of shares is adjusted to allow for the conversion of all dilutive equity instruments.

In the event that the Acquisition is completed, the Directors expect that the 2016 Profit Forecast would no longer be valid, principally because the future financial performance of the Enlarged Group will be impacted by the following:

·    the increased leverage of the New Facilities (as more fully described in the Prospectus);

·    the dilution caused by the issue of ordinary shares in the Company (as more fully described in the Prospectus);

·    the impact of consolidating earnings that will be generated by Teltronic in the year ending 1 April 2016;

·    the cost savings generated by synergies (as more fully described in the Prospectus); and

·    restructuring, transaction and integration costs associated with the Acquisition.

Whilst the Directors expect the Acquisition to complete shortly after the Capital Raising, the Capital Raising is not conditional upon completion of the Acquisition. In the unlikely event that the Capital Raising completed but the Acquisition did not, the Profit Forecast would no longer be valid due to the dilution caused by the issue of the New Ordinary Shares by the Company.

Basis of Preparation

The Profit Estimate and Profit Forecast have been properly compiled on the basis of the assumptions stated below, on a basis consistent with the accounting policies of Sepura, which are in accordance with IFRS and are those which Sepura anticipates will be applicable for the financial years ending 27 March 2015 and 1 April 2016, respectively.

The Sepura Directors have prepared the 2015 Profit Estimate based on the unaudited interim results of Sepura for the six months ended 26 September 2014 and the unaudited management accounts for the six months ended 27 March 2015 and have prepared the 2016 Profit Forecast based on forecasts for the period from 28 March 2015 to 1 April 2016.

Profit Estimate Assumptions

Factor affecting the Profit Estimate that are outside the influence or control of the Sepura Directors:

·   There will be no changes required to the provision recorded against receivable balances at 27 March 2015 relating to projects in Greece and the Middle East, payments for which are materially overdue.

As at 27 March 2015, the Sepura Group had receivable balances relating to projects in Greece and the Middle East, payments for which are materially overdue. While the Board remains confident that all such overdue amounts will be collected and that no further provision is required, a deterioration in the macro-economic environment or the continued delay in the payment processes with the relevant customers could lead to further provisions being required prior to the sign off of Sepura's accounts for the financial year ended 27 March 2015.

Profit Forecast Assumptions

Factors affecting the Profit Forecast that are outside the influence or control of the Sepura Directors:

·   There will be no material change to macroeconomic, political or legal conditions in the markets or regions in which the Sepura Group operates that materially affect the Sepura Group during the year ending 1 April 2016;

·   There will be no material changes in market conditions within the PMR industry and public sector over the forecast period to 1 April 2016 in relation to either customer demand, credit risk or competitive environment;

·   The exchange rates and inflation and tax rates in the Sepura Group's principal markets will remain materially unchanged from the prevailing rates;

·   There will be no material change in Sepura's labour costs, including medical and pension and other post-retirement benefits driven by external parties or regulations;

·    There will be no business disruption that will have a significant impact on Sepura's operations, customers or financial performance;

·    There will be no material change in legislation or regulatory requirements impacting on Sepura's operations or its accounting policies; and

·   There will be no changes required to the provision recorded against receivable balances at 27 March 2015 relating to projects in Greece and the Middle East, payments for which are materially overdue.

As at 27 March 2015, the Sepura Group had receivable balances relating to projects in Greece and the Middle East, payments for which are materially overdue. While the Board remains confident that all such overdue amounts will be collected and that no further provision is required, a deterioration in the macro-economic environment or the continued delay in the payment processes with the relevant customers could lead to further provisions being required prior to the sign off of Sepura's accounts for the financial year ended 1 April 2016.

Factors affecting the Profit Forecast that are within the influence or control of the Sepura Directors:

·   Current contract negotiations with a number of clients will conclude materially as the Directors would reasonably expect based on Sepura's past experience;

·   No material new client contract issues will arise beyond those that are already known to the Directors at the current time and built into the forecasts;

·    There will be no significant change to the continued expenditure on product development and customer uptake of new products; and

·     There will be no change in the number of shares in issue during the financial year ending 1 April 2016.

The Profit Forecast excludes the impact of the Acquisition and the Capital Raising, any exceptional transaction and transition costs associated with the proposed acquisition of Teltronic by Sepura.