Final Results

Deltex Medical Group PLC
24 March 2004

24 March 2004

                           Deltex Medical Group plc

            Preliminary results for the year ended 31 December 2003

                          Significant progress in 2003

Deltex Medical Group plc ('Deltex Medical'/'Group'/'Company'), the AIM listed
haemodynamic monitoring company, announces its results for the year to 31
December 2003.

Highlights

  • Turnover increased by 74% to £3,084,000 (2002: £1,776,000)

  • Gross profit rose by 110%  to £1,862,000 (2002: £886,000)

  • Operating loss for the year decreased to £2,425,000 (2002: £3,261,000)

  • Combined sales to key markets of UK and Europe more than doubled

  • Continuing reductions in cash burn

  • Marketing approach implemented to encourage closer collaboration between
    doctors and managers, resulting in significant progress in making healthcare
    system funds available to purchase the company's technology

  • Our first wide-scale hospital deals achieved in the UK: sufficient
    monitors and probes supplied to ten NHS hospitals for routine use in both
    operating theatres and in critical care

  • Arranged a series of post-procurement audit projects in UK National Health
    Service Trusts to demonstrate the economic benefit of haemodynamic
    optimisation in moderate and major surgery

  • Development and implementation of country-specific sales and marketing
    plans in conjunction with our distributor partners in Europe, increasing
    sales by over 60% year on year

  • Development and launch of a nasally compatible probe for use in intensive
    care, a range of probes for use in awake patients and a dedicated paediatric
    probe for use in children undergoing surgery or in intensive care


Chairman, Nigel Keen, commented:

'Deltex Medical made significant progress in 2003. Doctors are increasingly
recognising the clinical benefits associated with optimising their patients'
haemodynamic status in the operating theatre and intensive care unit. Hospital
and healthcare managers are becoming increasingly aware that haemodynamic
optimisation can provide significant economic benefits to the wider healthcare
system.

'Across the world, healthcare providers are searching for new ways to provide
the highest quality of care within ever tighter budgetary constraints. It is our
ability to help patients get better, quicker and to reverse the spiralling costs
to the system of haemodynamic compromise that provides the enormous opportunity
for Deltex Medical.'

For further information, please contact:-


Enquiries

Deltex Medical Group plc

Nigel Keen, Chairman              [e-mail]     01243 774 837

Andy Hill, Chief Executive        [e-mail]      01243 774 837

Ewan Phillips, Finance Director   [e-mail]  01243 774 837

Charles Stanley & Co. Ltd

Philip Davies                                                      0207 953 2000

Financial Dynamics

Stephanie Highett/Francetta Carr  [e-mail]         0207 831 3113


Notes for Editors

Deltex Medical primarily develops, assembles and markets a cardiac function
monitor and therapy guidance device, the CardioQTM ('CardioQ'). The CardioQ
incorporates the Company's proprietary software and a small diameter,
easy-to-use, minimally invasive, disposable oesophageal probe that is used for
transmitting and receiving an ultrasound signal. By using this technology, the
CardioQ provides clinicians with the ability to haemodynamically optimise
critically ill patients and those undergoing routine moderate to major surgery
through the controlled administration of fluid and drugs. Haemodynamic
optimisation has been scientifically proven to improve the speed and quality of
patient recovery and reduce hospital stay.

There are already over 1,250 CardioQs currently in use in hospitals worldwide
and distribution arrangements are in place in over 30 countries. In addition,
there are currently more than 75 clinical publications on the use of the CardioQ
which have repeatedly:-

  • validated the results of the CardioQ against known standards for measuring
    cardiac output, demonstrating that the technology works

  • proved that the CardioQ works in a wide range of surgical procedures

  • demonstrated that the Company's technology provides significant health and
    economic benefits by helping to reduce post-operative complications and
    length of hospital stays by an average of 30 to 40 per cent for a wide range
    of patients.

Deltex Medical - Chairman's Statement

Group Overview

The human body delivers oxygen to all its major organs through the circulation
of blood around the system. In critically ill patients, or when individuals are
involved in a traumatic event, it is vital that the clinician is given
information to ensure that this blood circulation is continuing properly ('
haemodynamic optimisation'). If adequate oxygen delivery is not maintained for
any extended period of time ('haemodynamic compromise'), the patient takes
longer to recover, does not recover completely or does not recover at all.

Similarly, patients who undergo routine moderate and major surgery are at risk
of complications and extended hospital stay due to haemodynamic compromise. This
is because all surgical patients are denied fluid and food for a period prior to
their operation ('nil by mouth'). During the operation they are treated with
anaesthetic agents that affect the body's ability to compensate for the
dehydration caused by the nil by mouth regime; and are further compromised
through blood loss and evaporation from the wound during the surgical procedure.

Deltex Medical has developed and established a cardiac function monitoring
system, the CardioQTM, which it manufactures and markets. The CardioQ monitor
uses Doppler ultrasound technology to provide the clinician with information to
allow them to ensure that critically ill patients and those undergoing moderate
and major surgery are haemodynamically optimised. Data is provided to the
clinician through a disposable probe which is inserted into the patient's
oesophagus through the mouth or nose. Using this data, the doctor is able to
intervene actively to manage the patient's fluid status with the goal of
achieving, and then maintaining, haemodynamic optimisation. Clinical studies
have repeatedly shown that using the CardioQ provides significant health and
economic benefits by helping to reduce post-operative complications and length
of hospital stays by more than 30% on average for a wide range of patients.

Whilst originally designed for use in sedated patients, the Company has
developed a range of probes that extend the use of the CardioQ to awake
patients. Deltex Medical is also developing a wholly non-invasive monitoring
solution that will enable doctors to assess rapidly the patient's haemodynamic
status from the time that he or she arrives in the healthcare system, whether at
the site of an accident or on admission to hospital, through to discharge of the
patient from the hospital.

Deltex Medical's strategy, and its goal, is to make haemodynamic optimisation,
guided by the CardioQ, a standard of care in operating theatres, intensive care
units and accident and emergency departments worldwide. This will enable doctors
to guide therapy which will help them make their patients better, quicker.

Trading Results

Deltex Medical made significant progress in 2003. Doctors are increasingly
recognising the clinical benefits associated with optimising their patients'
haemodynamic status in the operating theatre and intensive care unit. Hospital
and healthcare managers are becoming increasingly aware that haemodynamic
optimisation can provide significant economic benefits to the wider healthcare
system because haemodynamically optimised patients recover more fully, more
quickly and can leave hospital earlier than would otherwise be the case.

In the year to 31 December 2003, sales increased by 74% to £3,084,000. Probe
sales were 35,000, up from 24,000 in 2002, representing an increase of 46%.
Monitor sales increased 37% to 276 units compared to 201 in 2002. The installed
base of CardioQs (which includes units placed against recurring probe
commitments) increased by 49% from 841 at the end of 2002 to 1,253 by the end of
2003.

The net loss before taxation for the year amounted to £2,396,000 (2002
£3,135,000). In the second half of the year, sales doubled while the net
operating loss decreased from £1,700,000 to £700,000. Approximately £650,000 of
costs associated with post-procurement audit projects will be charged in the
first half of 2004 as the hospitals involved deliver the data collection and
analysis specified in the projects.

During the period the Company implemented an Enterprise Management Incentive
Scheme in order that senior managers could be paid bonuses earned in shares
rather than in cash. The profit and loss account charge under UITF17 in respect
of these bonuses was £223,000.

Cash at the end of the year was £1,093,000 with debtors at record levels
following particularly strong December sales. The underlying level of cash burn
continued to reduce throughout 2003 as sales increased.  Further reductions in
the burn rate have been realised since the year end and the month-on-month burn
rate is now significantly lower than at any similar period in the Company's
history.

During the period the Company raised a total of £2,029,000 after expenses in
additional equity capital via the issue of 24,467,768 1p ordinary shares. The
proceeds from these fundraising activities provided additional working capital
to expand and accelerate the penetration of the UK and key European markets.

The UK, our home market, is our most successful sales region to date. There are
now over 400 CardioQs in regular use in approaching 200 hospitals in the UK.
This means that at the end of the year more than half of the major UK NHS
hospitals were using the CardioQ. Haemodynamic optimisation has become a
standard of care in specific applications in many of these institutions. Demand
for education and training reflects this growing reliance on our technology. On
average our UK clinical training team was teaching 450 medical staff in the
class room and in excess of 170 at the bedside every month during 2003.
Approximately 55 patients were being monitored on average each day at the end of
2003 compared to approximately 25 each day coming into the year with significant
potential for further increases as monitors installed towards the end of the
year come into routine use. Probe sales in the UK doubled from 10,000 in 2002 to
20,000 in 2003. 30% of this increase came from continued steady growth in our UK
intensive care business and 70% from the increasing uptake of our operating
theatre probes.

Market Development

United Kingdom

Fundamental changes are currently being introduced into the UK National Health
Service. The changes relating to funding and the policy of 'payment by results'
represent a significant opportunity for the CardioQ system.  Being closer to our
customers has enabled us to devise and implement a variety of unique strategies
tailored to these changes.  In addition, our relationships with leading doctors
in the UK and overseas has led directly to the development of a range of new
probe solutions for specific applications in operating theatres, awake patients
and in children.

We are closely involved with a working group of senior doctors who are
developing guidelines for improving the care of patients undergoing moderate and
major surgery. These guidelines have at their heart the recommendation that
haemodynamic optimisation become a standard of care in these patients. It is the
intention of this group to secure the endorsement of these guidelines by the
Royal Colleges of Anaesthesia and Surgery and the Intensive Care Society

While haemodynamic optimisation leads to quicker, fuller recovery in patients
undergoing surgery or in critical care, it is the fact that patients are fit to
leave hospital earlier and consume less care resource during their stay that is
of significant interest to hospital and healthcare managers.

As a result, a number of hospitals in the UK have been evaluating the use of the
CardioQ in all patients undergoing moderate and major surgery. In order to
accelerate the wide-scale use of the CardioQ, in December the Company entered
into partnership arrangements with the five Trusts that were furthest along the
path to implementing this approach. Ten hospitals within these trusts are
undertaking a post-procurement audit, the primary objective of which is to
evaluate the economic impact of haemodynamic optimisation at each site from a
management perspective so we can use the data to accelerate the spread of
hospital-wide adoption across the UK.  These Trusts have purchased monitors to
the value of £387,000 in order to be able to treat the vast majority of their
patients undergoing moderate and major surgery and in intensive care. In
addition, these Trusts purchased £253,000 of disposable probes in 2003,
sufficient to meet the training needs for these monitors and to allow them to
participate in the post-procurement audit. Deltex Medical has committed to
provide the Trusts with an equivalent amount of funding (£640,000) towards the
cost to the Trusts of the extensive data collection and analysis that this
post-procurement audit entails.

These projects are expected to come to a conclusion in the summer of 2004.
Since the year end, in these hospitals, significant numbers of doctors, nurses
and other staff responsible for treating patients undergoing moderate and major
surgery have been trained in the use of the CardioQ and seven of the ten
hospitals have already started collecting the results of treating large volumes
of patients.  Feedback from all the sites is positive and indicates that
patients being haemodynamically optimised are receiving significantly greater
amounts of fluid at an earlier stage than before.  Anecdotal evidence is growing
that these positive clinical changes are beginning to result in reduced pressure
on scarce resources in the hospitals concerned.

Overseas Markets

Continental Europe

In late 2002 we created a small, dedicated team to support our distributor
partners in Europe. This has enabled us to build on our UK experience and
develop country-specific strategies for accelerating sales. The team has focused
on creating stronger, more effective links with the distributors and developing
a partnership approach to strategy development.

We have put in place a focused clinical training programme and presented
educational seminars to more than 500 clinical staff across Europe during the
year. Combined with targeted distributor training undertaken at one of our UK
hospital training sites, we now have a powerful message with which to create
awareness of our technology and the benefits of haemodynamic optimisation.
Consequently, sales growth of over 60% was achieved in 2003 compared to the
prior year.

Our key European markets remain France, Italy and Spain, although their relative
contribution to European revenues is reducing as sales increase in other
countries. In key countries we have been able to identify opportunities for
hospital-wide projects similar to the post-procurement audit projects currently
underway in the UK.

United States

Throughout 2003 we continued with our strategy of creating a scaleable business
model in the USA that we can roll-out nationally with a partner. Our small
clinical educator sales team has continued to focus on a limited number of
accounts and made good progress in expanding adoption of the CardioQ in these
hospitals.

We are actively working on a number of parallel approaches to accelerate
adoption in the USA. Each approach is tailored to a specific type of healthcare
provider organisation in this complex market.

We are currently engaged in discussion with one of the major hospital groups to
implement a post-procurement audit project based on our experience in the UK.
This group intends to undertake the project at its own expense at one of its key
sites in Texas. It is currently anticipated that this project may reach its
conclusion in the last quarter of 2004.

Far East and South America

Sales in the Far East and South America have not been as strong as we had hoped.
This is mainly related to difficulties with reimbursement of medical device
technologies that affect all manufacturers. On the whole, our distributor
partners are working well in a bureaucratic environment over which they have
only minimal influence.

Encouragingly, interest in our products in these regions is growing and mirrors
the increasing recognition of the benefits of haemodynamic optimisation seen in
the UK and Europe. However, these markets, although sharing many of the issues
that face healthcare systems elsewhere in the world, have low labour costs and a
less sophisticated approach to health-economics. This makes a cost-effectiveness
argument less likely to persuade the healthcare managers to make funds available
to doctors wishing to use our products in the short-term than elsewhere.

In light of these complexities, we reduced our support in the South American
territories late in 2003 and are working actively with our distributors to
determine the best approach going forward.

Our priority in these regions is to determine which countries merit continued
investment in the short- term and which should be left to continue to work with
our technology with a lower level of clinical support from us.

After several false starts we have begun to see regular orders for probes from
our Korean distributor. Most of the regulatory and reimbursement barriers to the
clinical demand for the CardioQ in Korea appear finally to have been overcome.

We are working with our distributors in Japan, China and Taiwan to unlock the
significant business opportunity in these countries. Our plans going forward
will be targeted to create the greatest value from available resources and with
minimal additional investment.

Research and Development

A key focus of our Research and Development activity in 2003 has been to provide
the specific probe solutions required to address the specific clinical needs
identified by our sales and marketing activities.

We have now complemented our dedicated surgical probe range with a longer
duration, nasally compatible probe for use in intensive care; a dedicated probe
for use in children undergoing surgery or in intensive care; and a range of
probes for use in awake patients. Each of these new products has been developed
to share a common technology platform, providing greater flexibility in
manufacturing while creating opportunities to reduce component stock levels.

Our research and development team has been working on accelerating the
development of the SupraQTM, a wholly non-invasive monitoring solution that
provides a 'snapshot' of a patient's haemodynamic status. The opportunity for
this monitoring approach is considerable and we have already identified a number
of important clinical areas where such a device could have wide application. The
potential range of clinical applications of the SupraQTM is significantly
broader than that of the CardioQ, meaning that one day patients could benefit
from use of the Company's technology throughout the whole healthcare system.
Early feedback on evaluation units in clinical use has been very positive.

Additionally, we have begun the process of specifying the successor to the
CardioQ and have successfully completed the initial clinical validation of the
new generation computing platform that will form the core of this and future
monitors.

Key Achievements

Our key achievements during this period have been to:

  • Increase turnover by 74%

  • Implement a marketing approach that builds bridges between doctors, who
    want to make haemodynamic optimisation a standard of care in their practice,
    and healthcare managers, who want to provide high quality healthcare cost
    effectively. This approach has enabled us to make significant progress in
    making healthcare system funds available to purchase our technology

  • Achieve our first wide-scale hospital deals in the UK, supplying
    sufficient monitors and probes to ten NHS hospitals to cover routine use in
    both operating theatres and in critical care

  • Arrange a series of post-procurement audit projects in UK NHS Trusts to
    demonstrate the impact of haemodynamic optimisation in moderate and major
    surgery and in intensive care from a management perspective

  • Develop and implement country-specific sales and marketing plans in
    conjunction with our distributor partners in Europe, increasing sales by
    over 60% year on year

  • Upgrade our quality and regulatory systems to successfully comply with
    changes to international standards governing the sale of our medical devices
    in Europe

  • Successfully complete our first on-site US Food and Drug Administration
    (FDA) inspection

  • Successfully upgrade our FDA 510K approval to sell the CardioQ system in
    the USA

  • Develop and launch a nasally compatible probe for use in intensive care, a
    range of probes for use in awake patients and a dedicated paediatric probe
    for use in children undergoing surgery or in intensive care

Prospects

The momentum that Deltex Medical created in 2003 is continuing to build in the
first few months of 2004. Haemodynamic optimisation is at the top of the agenda
for doctors managing patients undergoing moderate and major surgery and in
intensive care. It is becoming clear to the hospitals which use the CardioQ
system that Deltex Medical provides the best tools, the best training, and the
best support for doctors and healthcare managers that want to make haemodynamic
optimisation a standard of care in their hospitals. In order to maintain this
momentum we will have to manage carefully our limited resources to enable us to
continue to develop the opportunities open to us without overstretching the
funding capabilities of the business.

Across the world, healthcare providers are searching for new ways to provide the
highest quality of care within ever tighter budgetary constraints. It is our
ability to help patients get better, quicker and to reverse the spiralling costs
to the system of haemodynamic compromise that provides the enormous opportunity
for Deltex Medical. The partnerships we are forging with doctors and healthcare
managers in the UK, the USA and in Europe will be instrumental for us to reach
our overarching goal - making haemodynamic optimisation, driven by our
technology, a standard of care in surgery, critical care and throughout the
healthcare system.

By achieving this we are confident that we will deliver increasing and
sustainable value to our shareholders.

Nigel Keen
Chairman
24 March 2004

Consolidated profit and loss account
for the year ended 31 December 2003

                                                                                   2003          2002
                                                    Note                           £000          £000
                                                                              Unaudited       Audited

Turnover                                              2                           3,084         1,776
Cost of sales                                                                   (1,222)         (890)
                                                                                 ------        ------
Gross profit                                                                      1,862           886
                                                                                 ------        ------
Net operating expenses                                                          (4,287)       (4,147)
                                                                                 ------        ------
Operating loss                                                                  (2,425)       (3,261)
Net interest receivable                                                              29           126
                                                                                 ------        ------
Loss on ordinary activities before taxation                                     (2,396)       (3,135)
Tax on loss on ordinary activities                                                    4           233
                                                                                 ------        ------
Loss for the financial year                                                     (2,392)       (2,902)
                                                                                 ======        ======
Loss per share - basic and diluted                                               (4.7p)        (7.8p)
                                                                                 ======        ======


The above results all relate to continuing operations.  The loss on ordinary
activities before taxation and the loss for the financial year have been
computed on the historical cost basis.



Statement of Group total recognised gains and losses
for the year ended 31 December 2003
                                                                                   2003          2002
                                                                                   £000          £000
                                                                              Unaudited       Audited
Loss for the financial year                                                     (2,392)       (2,902)
Currency translation differences in foreign                                        (55)          (83)
currency net investment
                                                                                 ------        ------
                                                                                (2,447)       (2,985)
                                                                                 ======        ======


Consolidated balance sheet
At 31 December 2003

                                                                             2003               2002
                                                                             £000               £000
                                                                        Unaudited            Audited
Fixed assets
Tangible assets                                                               191                340
                                                                            -----              -----
Current assets
Stocks                                                                        572                649
Debtors                                                                     1,953                956
Cash at bank and in hand                                                    1,093              2,021
                                                                            -----              -----
                                                                            3,618              3,626
Creditors:
amounts falling due within one year                                       (1,059)            (1,050)
                                                                            -----              -----
Net current assets                                                          2,559              2,576
                                                                            -----              -----
Creditors:
amounts falling due after more than one year                                    -                (1)

                                                                            -----              -----
Net assets                                                                  2,750              2,915
                                                                            =====              =====
Capital and reserves
Called up share capital                                                       617              3,693
Share premium account                                                      10,381              8,597
Capital redemption reserve                                                 17,476             14,125
Merger reserve                                                              1,776              1,776
Profit and loss account                                                  (27,500)           (25,276)
                                                                            -----               ----
Equity shareholders' funds                                                  2,750              2,915
                                                                            =====              =====



Consolidated cash flow statement
for the year ended 31 December 2003
                                                                                  2003          2002
                                                 Note                             £000          £000
                                                                             Unaudited       Audited

Net cash outflow from operating activities        3                            (2,960)       (3,360)
                                                                                ------        ------
Returns on investments and servicing of
finance
Interest received                                                                   31           130
Interest paid                                                                      (2)           (3)
                                                                                ------        ------
Net cash inflow from returns on                                                     29           127
investments and servicing of finance
                                                                                ------        ------

Taxation                                                                            36            85

Capital expenditure
Purchase of tangible fixed assets                                                 (45)         (241)
Sale of tangible fixed assets                                                        -             1
                                                                                ------        ------
Net cash outflow from capital expenditure                                         (45)         (240)
                                                                                ------        ------
Net cash outflow before financing                                              (2,940)       (3,388)
                                                                                ------        ------
Financing
Issue of ordinary share capital                                                  2,161             -
Expenses in connection with share issue                                          (132)             -
Capital element of finance lease rentals                                           (5)           (8)
                                                                                ------        ------
Net cash inflow/(outflow) from financing                                         2,024           (8)
                                                                                ------        ------
Decrease in net cash in the year                                                 (916)       (3,396)
                                                                                 =====         =====






Notes to the preliminary statement
for the year ended 31 December 2003

1.         Nature of the financial information

The financial statements for Deltex Medical Group plc have yet to be approved
for the year ended 31 December 2003. The financial information set out in the
announcement does not constitute the Company's statutory accounts for the year
ended 31 December 2003 or 31 December 2002. The financial information for the
year ended 31 December 2002 is derived from the statutory accounts for that year
which have been delivered to the Registrar of Companies. The auditors reported
on those accounts; their report was unqualified and did not contain a statement
under either Section 237 (2) or Section 237 (3) of the Companies Act 1985. The
statutory accounts for the year ended 31 December 2003 will be finalised on the
basis of the financial information presented by the directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the Company's Annual General meeting.

The preliminary results have been prepared in accordance with applicable
accounting standards.  The particular accounting policies adopted are the same
as those adopted in the financial statements for the year ended 31 December
2003.

2.                   Turnover

The Group's activities consist solely of the manufacture and marketing of
medical devices.  By origin, all sales are United Kingdom sales.
                                                                              2003             2002
                                                                              £000             £000
                                                                         Unaudited          Audited
Analysis of turnover by destination

United Kingdom                                                               1,878              731
United States of America                                                       357              353
Rest of Europe                                                                 654              401
Rest of the World                                                              195              291
                                                                            ------            -----
                                                                             3,084            1,776
                                                                            ======            =====

3.                   Reconciliation of operating loss to net cash outflow from
operating activities


                                                                               2003             2002
                                                                               £000             £000
                                                                          Unaudited          Audited

Operating loss                                                              (2,425)          (3,261)
Depreciation on tangible fixed assets                                           186              304
Loss on sale of fixed assets                                                      -                9
Exchange differences                                                           (19)                -
Decrease in stocks                                                               77                3
Increase in debtors                                                         (1,029)            (367)
Increase/(decrease) in creditors                                                 27             (48)
Costs associated with share option scheme                                       223                -
                                                                             ------           ------
Net cash outflow from operating activities                                  (2,960)          (3,360)
                                                                            =======          =======

4.                   Dividends

The directors do not recommend payment of a dividend (2002: nil).

5.                   Loss per share

The loss per share calculation for 2003 is based on the loss for the financial
year of £2,392,000 and weighted average number of shares in issue of 50.8
million.  For 2002 the loss per share calculation was based upon the loss of
£2,902,000 and weighted average number of shares in issue of 36.9 million.

The Group had no dilutive potential ordinary shares in either year, which would
serve to increase the loss per ordinary share.  Therefore there is no difference
between the loss per ordinary share and the diluted loss per ordinary share.

6.            Distribution of announcement

Copies of this announcement are being sent to all shareholders and will be
available for collection free of charge from the Company's registered office at
Terminus Road, Chichester, West Sussex PO19 8TX.




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