Interim Results

September 2013

Ewan Phillips, CEO Paul Mitchell, CFO

Andy Mears, Group Sales Director September 2013

www.deltexmedical.com

•  Robust evidence base in intra-operative fluid management: better outcomes, lower costs

•  Significant market opportunity as healthcare systems around the world seek to increase quality of patient care while controlling costs

–  Market leading positions in the most developed markets for intra-operative fluid management

–  First ever medtech business to persuade the world’s largest healthcare provider (the NHS) to adopt its technology ‘at pace and at scale’

–  Building strong platforms for growth in other evolving major markets

•  Strengthening financials –  Building strong base of recurring revenue from probe sales –  High gross margins –  Costs remain under tight control –  Generating substantial cash returns from UK sales operation

Market leading position in ODM

2

•  Surgical probe revenues up 12% to £2.3m •  UK up14%; Q2 over 30% •  USA up 17% •  International up 3%

•  Dedicated trainer accounts expanded in UK and US •  Strong growth •  Pipeline building

•  US reimbursement established •  Signs of US market acceleration •  Positive French clinical guidelines •  Cash loss before Premier

£588,000 (2012: £754,000)

H1 Overview

Surgical probes – high growth £’000

4

ICU probes

Monitor related

•  New format •  Key Performance Indicators •  Profitability on cash basis •  Profitability pre- & post-Premier

•  Gross margin probes around 77% •  Cash loss reduced by £164,000

•  Probe margin up £144,000 •  Net monitor income down £55,000 •  Cash costs down £67,000

•  £nil H1 barter income (£388,000)

•  £293,000 Premier costs

H1 2013 £’000

H1 2012 £’000

Probe revenue 2,652 2,426

Gross profit 2,030 1,886

Sundry income 15 4

Net monitor income 68 123

Cash costs (2,700) (2,767)

Loss before Premier investment and non-cash items

(588) (754)

Clinical research income - 388

Non-cash costs (502) (848)

Loss before Premier investment costs

(1,090) (1,214)

Costs of Premier investment (293) -

Operating loss (1,383) (1,214)

P&L Summary

5

2012 £’000

2011 £’000

2010 £’000

Probe revenue 5,265 4,800 4,595

Gross profit 3,962 3,562 3,393

Sundry income 2 6 (1)

Net monitor income less costs 401 470 850

Cash costs (5,427) (5,165) (4,733)

Loss before Premier investment and non-cash items (1,062) (1,127) (491)

Clinical research income 448 500 319

Non-cash costs (1,415) (775) (1,181)

Loss before Premier investment costs (2,029) (1,402) (1,353)

Costs of Premier investment (49) - -

Operating loss (2,078) (1,402) (1,353)

Prior years

6

P&L summary continued – R&D

7

R&D H1 2013 £’000

H1 2012 £’000

Cash cost 298 348

Clinical trial amortisation

55 73

Total incurred: 353 421

Capitalised (209) (208)

Amortised 55 59

P&L charge 199 272

•  ODM+ released in 2012 •  ODM3 development •  Further platform development

Non cash costs 2013 £’000

2012 £’000

Share based payments

270 251

Equity settled costs

60 186

Clinical trial charges (net)

129 344

Dep’n and amortisation

43 67

502 848

Net monitor income

2013 £’000

2012 £’000

Revenue from monitors sold

175 283

Maintenance revenue

49 57

Cost of sales - monitors

(54) (162)

Amortisation costs of placed monitors

(102) (55)

68 123

Non-cash items/net monitor income

8

30 June 2013

£’000

31 December 2012

£’000

PPE 504 463

Intangible (R&D)

1,230 1,076

Inventories 1,262 963

Trade and other

2,909 2,972

Income tax recoverable

49 114

Cash 1,460 667

7,414 6,255

Balance sheet – assets and other liabilities

30 June 2013

£’000

31 December 2012

£’000

Trade payables

822 969

Tax and Soc. Sec.

156 169

Other 95 55

Accruals 898 673

1,971 1,866

•  Sales •  Lead generation & pursuit •  Local evaluation inc education/training •  Business case, pricing, procurement •  Cross-selling: surgeries, system/network

•  Clinical training •  Classroom & bedside •  Coaching: change practice •  Cross-selling: surgeries •  Dedicated training for super-users

•  Sales & training together •  Expand types of surgery •  Keep it fresh

•  Metrics •  Probe consumption = unit sales •  Pipeline: dedicated trainer accounts

1.  Get in there 2.  Get established 3.  Expand

Sales & clinical – globally: harmony works

10

EXPANSION

Surgeries Systems

GET ESTABLISHED

Routine use Budget

GET IN

Champion(s) Install monitors

•  Dedicated trainer programme

•  Expand via cross-selling •  Ad hoc: individual users

•  Slow, expensive training investment unless sell monitor •  Systemic: national CQUIN minima

•  Early days: await year 2 targets & sanctions •  Systemic: NICE guidance

•  3 tier pricing: qualified accounts •  Historic: pay for monitor, lifetime training •  Ad hoc use, DM box: pay for training •  CQUIN etc…

UK sales – growth focus

11

12

UK progress •  Surgical probe revenue increased by 14% over prior year (Q2 up 30%)

•  Compliance with NHS implementation drive varies between Trusts •  Focus on Trusts most advanced in plans to adopt •  Dedicated trainer programme commenced in two NHS Trusts

•  Probe run rate doubled in both •  Pipeline extended: two imminent

•  UK ICU probe sales flattening off

•  Installed base •  Surgical installed base increased by 66 monitors (681) •  Total installed base passed 1,000 •  49 monitors placed by Company during period

0

100

200

300

400

500

600

700

800

Q1 Q2 Q3 Q4

2007 2008 2009 2010 2011 2012 2013

13

Quarterly UK surgical probe usage - £’000

•  Active in circa 30 countries •  Direct in Spain, others distribution

•  France probe sales up 21%

•  Largest ever IOFM pilot results published

•  Movement towards JV’s for more developed markets

Distribution⎝Joint venture⎝Direct Distribution •  Low cost market entry •  Works well if distributor invests in training Joint venture •  Low set up costs from established distribution •  Drive installed base at manufacturing cost •  Pooled margin justifies training •  Platform for direct Direct sales •  High set up costs •  Focused entry: cheaper, higher initial return –

fund expansion organically

International sales

14

15

US Market

•  Aim to establish a number of model accounts 35+ within two years

•  US market strengths •  C-suite accessibility •  Focus on outcomes & costs •  Anaesthesia more generalist = easier cross-selling once established •  Physician payment •  Accelerating clinical acceptance

•  Key accounts: •  Most deeply penetrated Deltex accounts in the world •  More deeply penetrated than competitor reference accounts •  High returns, rapid growth from dedicated trainer model

16

US Progress •  Reimbursement fully established - $101 and separate specific code

•  Sales •  Hospital evaluations

•  Acceleration in evaluations by hospitals/systems •  Two strategically important system evaluations completed

•  Two further implementation agreements completed since end of period – embedded trainers being recruited

•  Additional trainer hired at key hospital •  VP US Sales hired in July •  Strong pipeline

•  Other •  Ongoing Washington based market access activity •  RCT published showing significant reductions in complications in ERAS setting •  510K for ODM+ submitted

17

US Progress continued

Status Hospitals Targets in system

Since June Targets in system

Dedicated trainer 2 +5, +14

Implementation agreed

4 +4 +2

Formal evaluation

3 +3 +31

Under/pending evaluation

8 n/a +1 +27

Active but limited 8 n/a

Premier: 2015 end date

3+ +30/+++

Topic Selected

Burden of Illness Study

Recruit Faculty

Develop Change Concept

Predictive Model

Enroll Health Systems

Finalize Program Design

1st Action Period

Plan

Do Study

Act

2nd Action Period

Plan

Do Study

Act Review & Change

Execute Dissemination

Plan Disseminate

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Summary

•  Growing traction in key markets

•  Significant increase in evaluations in the USA

•  Strong pipeline of accounts in UK and USA under dedicated trainer programmes

•  Strong and increasing cash returns from UK business

•  Move to owning monitor fleet

•  UK maximise probe £s

•  Migrate more developed distributors to JV

20

Appendices

•  Cash and net debt

•  Sales analysis

•  Board of Directors

•  Key statistics

•  Operating cash •  Op. cashflow before movements in w/cap

and Premier £884k (2012: £895k) •  2013 cost base (exc. Premier) set so that

cash generative at c£600,000 per month sales

•  Working capital •  £300k investment in inventory

2013 £’000

2012 £’000

Cash 1,460 667

Convertible (1,013) (1,009)

US loan (407) (374)

Invoice facility (665) (724)

Finance lease (8) (12)

(633) (1,452)

Cash and net debt

Sales analysis 2013

Probes Units

2013 Mon’s Units

2013 Probes

£’000

2013 Mon’s £’000

2013 Other £’000

2013 Total £’000

2013 Probes

Units

2013 Mon’s Units

2013 Probes

£’000

2013 Mon’s £’000

2013 Other £’000

2013 Total £’000

Direct

UK* 21,455 27 1,738 126 84 1,948 19,920 56 1,589 430 99 2,118

USA 3,751 - 430 - 2 432 3,275 - 366 - 2 368

Spain 275 - 29 - - 29 252 2 31 23 - 54

Distributed

Europe 7,625 6 429 32 6 467 7,225 6 401 76 5 482

Row 545 3 26 17 - 43 780 45 39 142 3 184

33,651 36 2,652 175 92 2,919 31,452 109 2,426 671 109 3,206

*UK Probe split 2013 Units

2013 £’000

2012 Units

2012 £’000

Surgical 17.900 1,350 16,235 1,184

ICU 3,555 388 3,685 405

Total 21,455 1,738 19,920 1,589

Board of Directors

23

Ewan Phillips MA ACA Chief Executive Ewan joined Deltex Medical as Group Finance Director in August 2001 with a background in corporate finance. He took on responsibility for UK sales in October 2002 and was appointed managing director of the UK subsidiary in November 2005 before being appointed Chief Executive in September 2009. Paul Mitchell BSc FCA Finance Director Mr Mitchell joined Deltex Medical in August 2002 as Financial Controller, after qualifying as a Chartered Accountant with PricewaterhouseCoopers. In November 2004 he was appointed Company Secretary. Nigel Keen MA FCA Chairman Nigel has been involved with Deltex Medical since 1988, and Chairman since 1996. He is also the Non-executive Chairmanof Bioquell plc, Laird plc and Oxford Instruments plc. Nigel is the Chairman of the Remuneration Committee and the Audit Committee. Dr Edwin Snape MSc PhD Vice-Chairman Ed has been connected with Deltex Medical for over ten years and Vice-Chairman since 1999. He is currently a Director of Sultan Scientific Limited, Myoscience Inc., Spectra Analysis Instruments, Inc. and Lab 21 Limited. He has over 30 years’ experience investing in medical devices and life sciences businesses in the USA and Europe. Professor Sir Duncan Nichol Duncan has been an influential figure in the provision of acute health services in the UK throughout his career. He worked for the NHS for nearly 30 years in a number of senior management roles and was Chief Executive from 1989 to 1994. Duncan was the Deputy Chairman of the Christie NHS Foundation Trust from 2008 to 2012 and is currently Chairman of the Countess of Chester NHS Foundation Trust. Duncan is also currently a Non-executive Director of Synergy Healthcare plc, a provider of healthcare support services to the NHS and the first Chairman of the UK Academy for Healthcare Science. Julian Cazalet MA FCA Julian joined the Board in April 2008. He was until 2007 a Managing Director — Corporate Finance of JPMorgan Cazenove. After graduating in Economics from Cambridge, he qualified asa Chartered Accountant before joining Cazenove in 1973. He became a Partner in 1978. From 1989 he worked in Corporate Finance, firstly in Equity Capital Markets and subsequently advising listed companies. He is Chairman of Herald Investment Trust plc and a Director of Charles Taylor plc, Private Equity Investor plc and of a number of charities.

Key Statistics

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•  Share Price: 15.88p

•  Market: AIM

•  Ticker: DEMG

•  Market Cap: £26.6m

•  Ord. Shares in Issue: 164.8m

Significant Shareholders % of Issued Share Capital

Black Rock Inv Mgnt Ltd 8.78%

Legal and General Inv Mgngt Ltd 7.94%

Herald Inv Mgnt Ltd 6.52%

Charles Stanley & Co. Ltd 6.00%

Nigel Keen 4.10%

Julian Cazalet 2.46%