Deltex Medical Regulatory News (DEMG)

6 May 2015

Deltex Medical Group plc

("Deltex Medical", "the Company" or "the Group")

Chairman's Statement to Annual General Meeting

At the Annual General Meeting of Deltex Medical, the global leader in oesophageal Doppler monitoring ("ODM"), to be held today the Company's Chairman, Nigel Keen will make the following statement:

Deltex Medical has made good progress in the first four months of the year and we are on track in the key areas of the business.

Our US surgical probe sales growth is on plan. We have expanded from three to seven sales territories since October 2014. Our target is to have established, towards the middle of 2016, a platform for US national roll-out comprising 30 or more high quality hospitals who are implementing ODM extensively. To date, this year we have increased the number of accounts on this platform programme from six to ten, including our first such remote training account announced today. We continue to bring further accounts along the pipeline and interest in enhanced haemodynamic monitoring continues to grow amongst high quality hospitals across the USA.

Following a difficult 2014 in the UK with an 18% fall in probe revenues, in January we implemented changes to our business model: we reduced headcount, introduced digital e-learning and started distribution of third party products. UK sales in the first four months were close to flat with £62,000 sales of third party products offsetting most of a £79,000 (9%) decline in probe sales. May and June were relatively strong months for UK probe sales in 2014 and, at this stage, it is difficult to assess the underlying level of demand for ODM as the adverse effects of the NHS's abandonment of its national implementation drive early in 2014 have been exacerbated by many NHS hospitals cancelling surgical operations as a short term cost saving measure. However, reductions in our cost base, together with the additional contribution from lower margin third party sales, mean that our UK business is now generating more cash than last year. We are working on a number of initiatives aimed at restoring growth momentum to our UK Doppler business by the end of the year and are monitoring progress closely in an environment which remains challenging for innovation. In April NHS Supply Chain added our probes to their catalogue and we have already seen a few smaller customers move to take advantage of the 'one-click' ordering facility.

Probe run rates in our international business are on track in our focus markets. We expect this to contribute to revenue growth in our international business over the course of the year provided we also complete successfully a small number of capital tenders submitted in prior years. We have deployed our new e-learning platform as part of a remote support programme for distributors in non-focus markets and are encouraged by the early results.

We are making good progress with our R&D workstreams and, subject to successful trials, expect the benefits from a number of these to start to impact run-rates positively by the end of the year. Our product development strategy is aimed at providing the first multi-modal haemodynamic workstation. This, together with the developing market for enhanced haemodynamic monitoring, is creating opportunities for corporate partnerships and alliances which we are pursuing.

The Company's cash consumption is on plan following £1m of annualised reductions in our costs and negotiation of a lease extension at our manufacturing facility in the UK. This allows us to continue to invest with confidence both in expanding our US business and in R&D.

2015 is an important year for Deltex as we implement plans to make a series of step-changes in our product offering and shift our focus to the USA and other overseas markets that are better able than the UK to respond to demographic and economic pressures to deliver better quality healthcare at lower cost. Progress to date is encouraging and, although our growth expectations are weighted towards the second half of the year, we are on track to exit the year with the business in a strong position to profit from the evolving global market for enhanced haemodynamic monitoring.

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Notes for Editors

Deltex Medical manufactures and markets haemodynamic monitoring technologies. Deltex Medical's ODM is the only technology to measure blood flow in the central circulation in real time. Minimally invasive, easy to set up and quick to focus, the technology generates a low-frequency ultrasound signal, which is highly sensitive to changes in flow and measures them immediately. Deltex has been the only company in the enhanced haemodynamic space to build a robust and credible evidence base proving the clinical and economic benefits of its core technology, ODM. Randomised, controlled trials using Doppler have demonstrated that early fluid management intervention will reduce post-operative complications, reduce intensive care admissions, and reduce the length of hospital stay.

During 2013, the Company launched the CardioQ-ODM+ monitor that offers clinicians both of the two best-established technologies, Deltex Medical's ODM technology as well as Pulse Pressure Waveform Analysis ('PPWA') in one monitor. This allows clinicians to have unique real time insights into each of flow, pressure and resistance, the three pillars of haemodynamics.

Company goal

ODM is increasingly recognised as a standard of care for patients undergoing major surgery and in critical care. The broader clinical area of haemodynamic management of which ODM is a core constituent is also now becoming widely accepted as an important major new medical modality. Consequently, the Company's focus is on maximising value from the opportunities presented as enhanced haemodynamic management is adopted into routine clinical practice around the world.

The Company is currently in the implementation phase of achieving this goal in a number of territories worldwide, operating directly in the UK, USA, Spain and Canada and through distribution arrangements in a further 30 countries.

There are over 3,200 monitors installed in hospitals around the world and over 600,000 patients have been treated to date using Deltex Medical's single patient disposable probes.