Remuneration Committee Chairman's Letter

Dear Shareholder,

On behalf of the Board I am pleased to present Consort Medical's FY2014 Directors' Remuneration Report, our first under the new directors' remuneration reporting regulations.

This report is split into two sections. The first outlines our remuneration policy which, subject to shareholders' approval, will apply from 4 September, the date of the 2014 AGM. The second part outlines how we have applied remuneration policy during FY2014 and how we plan to apply the remuneration policy in FY2015.

Changes During the Year

In last year's report we highlighted that the Committee was considering revising the performance measures for 2013 LTIP awards. Following detailed consultation with shareholders the Committee concluded that, in order to incentivise sustained improvement in earnings as well as increasing share price and dividend return, it was appropriate to introduce an EPS performance condition. As such, for LTIP awards granted in 2013 vesting is based 50% on TSR against the FTSE Small Cap Index (excluding investment trust, finance, property and insurance companies) and 50% on aggregate EPS performance.

We believe that our current incentive structures remain appropriate and continue to align the interests of our executives with you, our shareholders. For this reason, no other changes to our incentives are proposed. The Committee will continue the practice of consulting with shareholders regarding any future changes to the remuneration policy.

FY2014 Incentive Payouts

The Committee reviewed base salaries for the executive directors and awarded an increase of 3.5% to both the CEO and CFO effective from 1 August 2014. These increases are in line with the average increase received for other employees in the Group.

The business has performed well during the year. Profit performance was strong with profit before tax and special items of £17.527m being delivered. The Company has also delivered on a number of key strategic objectives which are outlined in more detail in the Annual Remuneration Report. Taking into account performance during FY2014 the Committee determined that the CEO would receive a total bonus of 100% of salary (67% of maximum) and the CFO would receive a total bonus of 72% of salary (65% of maximum).

TSR performance over the last three years has been very strong. Over the period 1 May 2011 to 30 April 2014, Consort Medical's TSR increased by 25.08% per annum. This performance resulted in maximum vesting for 2011 LTIP awards.

I trust you will find this report informative, and I look forward to receiving your support for both resolutions at the AGM.

Dr William Jenkins
Chairman of the Remuneration Committee