Tristel Regulatory News (TSTL)

23 Oct 2006 07:01

Tristel PLC23 October 2006 TRISTEL plc Results for the year ended 30th June 2006 Tristel plc ("Tristel"), the infection and contamination control business, todayannounces its results for the year ended 30th June 2006. Tristel focuses on infection control products for acute NHS and private sectorhospitals, as well as primary care trusts, community hospitals and privatepractices. Tristel also provides products for legionella control in watersystems and contamination control in the food growing, food processing andpharmaceutical industries. Results Highlights • Turnover up 24% to £3.75m (2005: £3.01m) • Acquisition contributed sales of £94,000 • Operating profits up 56% to £0.68m (2005: £0.44m before exceptional items) • Pre-tax profit of £0.72m (2005: £0.10m), pre-tax margin of 19.2% • Full year dividend of 1p (2005: 0.5p). • Basic EPS 2.12p (2005: 0.24p) • Balance sheet: Total net assets of £2.00m (2005: £1.68m) Operations Highlights • £1m acquisition of Vernagene Limited on 5 June 2006 - adds products for legionella control in water systems and contamination control in food growing and processing industries. • Shareholder loan of £203,775 taken to part finance Vernagene acquisition repaid August 2006. • Co-marketing agreement with Johnson Diversey to develop products for the pharmaceutical industry. • Continuing overseas expansion with 14 export markets opened up. • Design and patent rights acquired for a sterilisation tray and hygiene work station. • British patent issued for the Tristel Sporicidal Wipe. • New product range for the environmental hygiene market - "Tristel Fusion for Surfaces" - a variant of the Tristel burstable sachet to compete with the chlorine tablets that are used globally for the disinfection of floors and walls in hospitals. • Q1 sales in-line with Board expectations. Commenting, Francisco Soler, Chairman, said: "This has been another year of solid progress for Tristel. We have achievedstrong growth in turnover, improved margins, and have increased operating profitand pre-tax profit significantly. We have entered the current financial yearwith a stronger, better balanced mix of activities and products than we have hadin the past. Reflecting our continuing confidence in the future, the Board isproposing the payment of a final dividend of 0.725 pence per ordinary share,bringing the divided payment for the year ended 30 June 2005 to 1 penny". For further information please contact: Tristel plc Parkgreen Communications Ltd Tel: 01638 721500 Tel: 020 7493 3716 Paul Swinney, Chief Executive Paul McManus Mob: 07798 805692 Mob: 07980 541 893 Paul Barnes, Finance Director Ben Knowles Mob: 07974 016 940 Mob: 07900 346 978 Chairman's introduction I am pleased to report that your Company made solid progress during the yearended 30 June 2006, increasing turnover by 24% to £3,745,680 (2005: £3,009,115)and operating profit by 56% to £684,207 (2005: £439,852 before exceptionalitems). Whilst operating profit has more than quadrupled in the past threeyears, the operating margin has increased from 9.4% in 2004 to 18.3% in 2006. Tristel Solutions, our sole operating subsidiary for most of the year, continuedits focus on the acute NHS and private sector hospitals, but made furtherprogress in penetrating primary care trusts, community hospitals and privatepractices with our growing range of infection control products. Tristel productsare the most widely used disinfectant solutions in all branches of endoscopy inthe United Kingdom. One of Tristel's strengths, gained as a result of theproduct development strategy that we have pursued in recent years, is the rangeof "solutions" it offers a hospital. To illustrate how the broad range of Tristel products might be employed in alarge metropolitan hospital, one could find two or more brands of Tristel liquiddisinfectant being used in the endoscopy department in different makes ofendoscope washer-disinfector; the Tristel Wipes System being used in the Ear,Nose and Throat (ENT) department; Tristel Duo and Fusion being used to disinfectfloors, walls and equipment in intensive care, and the suite of TristelUltrasound products being used in radiology. One of the most significant developments of the year, which was facilitated bythe flotation and its associated fund raising, was the acquisition of VernageneLimited on 5 June 2006. The business, renamed Tristel Technologies Limited, alsouses chlorine dioxide chemistry, but with different applications to those ofTristel Solutions. These are legionella control in buildings' water systems andcontamination control in the food growing and processing industries.Importantly, many of Tristel Technologies' customers are also hospitals. Thereare clear synergies and cross-selling opportunities between the two businessesand I am pleased with the way in which management is integrating the twooperations. Whilst the acquisition of Tristel Technologies was not planned at the time ofour flotation, it has enabled our management team to execute a digestibleacquisition that makes sound strategic sense. Outlook and future prospects. We have entered the current financial year with a stronger, better balanced mixof activities and products than we have had in the past. The Group has momentumand strong growth prospects in all the markets it serves, both within the UnitedKingdom and overseas. Q1 sales are encouraging and are in-line with Boardexpectations. Our earnings per share (basic) for the year ended 30 June 2006 were 2.12 pence.Reflecting our continuing confidence in the future, the Board is proposing thepayment of a final dividend of 0.725 pence per ordinary share, representing atotal payment of £172,818, and bringing the divided payment for the year ended30 June 2005 to 1 penny. Francisco A. Soler Chairman Chief Executive's review of activities. The importance of the infection control issue to hospitals at home and abroadhas not abated during the year. Outbreaks in hospital wards, for example of Clostridium difficile, and theconsequent death of patients, have been widely reported in our national press.They underline the need for more effective biocidal products and higherstandards of cleaning and hygiene in hospitals. Clostridium difficile isdescribed as a 'sporing' organism, the most resistant of microbes. It is theability of chlorine dioxide to kill spores, whilst being safe and easy to use,that distinguishes Tristel's chemistry from other disinfectants. The first Tristel product was introduced to the United Kingdom market in 1995.Today, we have over ten years experience of how to work best with the chemistry.We understand how it interacts with medical instruments and the materials ofwhich they are made and we are able to optimise concentrations and corrosioninhibition systems. Furthermore, we are well acquainted with the test programmesand regulatory frameworks that govern entry for chlorine dioxide products intodifferent markets. To our knowledge, Tristel remains the only chlorine dioxide based high-leveldisinfectant being widely used for the decontamination of medical devicesanywhere in the world. This first mover advantage has enabled Tristel to develop far beyond thegastroenterology market that was originally targeted. Patented chlorine dioxide wipes; patent pending foam systems for hard surfaces;our patent pending Generator and chlorine dioxide measurement system; theburstable sachet; the recently acquired patent pending sterilising tray whichenables, for the first time, single-use decontamination of endoscopes in marketsthat cannot afford automated systems: these are all innovations with which welead the decontamination industry. Some of the highlights of the year ended 30 June 2006 were:- • A British patent was issued for the Tristel Sporicidal Wipe. Whenever possible, we add to our portfolio of intellectual property rights, which we consider to be a major asset of the Company. The most recent additions have been applications filed on a sterilising tray and a hygiene work station; • The expansion into overseas markets gathered momentum with the appointment of distributors in Spain, Benelux, Romania, Greece, Cyprus, Turkey, Pakistan, Thailand, Malaysia, Singapore and New Zealand. Since the year end, further appointments have been made in the United Arab Emirates, Oman and South Africa. Whilst export sales have yet to make a significant contribution to turnover, the network of overseas distributors represents an important pipeline of future sales; • A co-marketing agreement was concluded with Johnson Diversey whereby Tristel's chemistry is utilised in their sporicidal product branded "Bi-Spore". The product is used for the decontamination of clean rooms and drug preparation areas in the pharmaceutical industry; • The acquisition of Vernagene Limited was concluded on 5 June 2006. We purchased the company's share capital for £1,000,000 cash and funded the acquisition using existing cash balances of £800,000, supplemented by a short term loan of £200,000 from one of our shareholders. The loan was repaid in August 2006. At the date of its acquisition the business (renamed Tristel Technologies Limited) employed six people and in its most recent financial year, ended 31 March 2006, achieved sales of £1,177,000 (2005: £1,145,000 and 2004: £906,000) and pre-tax profits of £301,000. Tristel Technologies has made a positive contribution to group profits since its purchase; • A product development programme was initiated by IVC Limited, Tristel's distributor in New Zealand, for the creation of a sterilising tray and a hygiene work station, both designed specifically for the use of Tristel's chemistry. Subsequent to the year end Tristel has entered into a technology acquisition agreement with IVC whereby the design rights and patent applications belonging to these products have been assigned to Tristel in return for the payment of future royalties. Outside of the most advanced healthcare markets, where endoscopes are mainly processed in sophisticated and costly automated machines, the majority of endoscopes are disinfected in basic trays and sinks. These can only hold disinfectant liquids that have to be used repeatedly for many instruments over a period of many hours or even days. The Tristel tray system, combined with Tristel's novel burstable sachet, Tristel Fusion, enables the disinfectant to be used once and to be dedicated to one instrument only. Results and finance Our main operating subsidiary, Tristel Solutions, achieved its eighth successiveyear of increased turnover since it first started trading in 1998. The 24%increase in group turnover was attributable to higher levels of TristelSolutions' sales of its Wipes System and Instrument Sterilants and TristelTechnologies' initial contribution to sales of £94,000. The gross profit margin increased from 51.9% in 2005 to 54.4% in the year underreview. Despite the expansion of our activities, we restricted the increase in expensegrowth to below that of the rate of turnover growth. Administrative expensestotalled £1,368,937 (2005: £1,121,215) and included in this expenditure wereresearch costs of £59,213 (2005: £109,970). Without the impact of exceptional items as recorded last year, we achievedrecord pre-tax profits of £719,579 compared to £104,196 in 2005. The pre-taxprofit margin was 19.2% The two Tristel subsidiaries are both profitable and generate positive cashflow. Their products are consumable and are purchased frequently and regularlyby their customers. During the year, net cash inflow from operations was£337,879 (2005: £312,543), after a reduction in creditors of £244,620 whichlargely related to the settlement of costs arising from the flotation on AIM. At the fiscal year-end, shareholders' funds stood at £2,005,692, an increase of£321,668, resulting from additions to profit and loss reserves. Paul SwinneyChief Executive Tristel plc Consolidated Income Statementfor the year ended 30 June 2006 Period 1.5.04 Year Ended to 30.6.06 30.6.05 restated Notes £ £CONTINUING OPERATIONS Revenue 3,745,680 3,009,115 Cost of sales (1,709,033) (1,448,048) GROSS PROFIT 2,036,647 1,561,067 Other operating income 16,497 -Administrative expenses (1,368,937) (1,121,215) OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS 684,207 439,852 Exceptional items Loss on sale of subsidiary 4 - (22,275)Employee share option costs 4 - (279,956) OPERATING PROFIT 684,207 137,621 Finance costs 5 - (39,200) Finance income 5 35,372 5,775 PROFIT BEFORE TAX 6 719,579 104,196 Tax 7 (213,176) (65,440) PROFIT FOR THE YEAR 506,403 38,756 Attributable to: Equity holders of the parent 22 120,218 128,143 Tristel plc Statement of Recognised Income and Expensefor the year ended 30 June 2006 Period 1.5.04 Year Ended to 30.6.06 30.6.05 restated Notes £ £ PROFIT FOR THE FINANCIAL YEAR 506,403 38,756 TOTAL RECOGNISED INCOME AND EXPENSE FOR THE YEAR 506,403 38,756 Attributable to: Equity holders of the parent 120,218 128,143 Earnings per share 10 Basic 2.12p 0.24pDiluted 2.09p 0.22p Other than the reallocation of the dividend payable there were no changes toequity on transition to IAS (note 22) Tristel plc Consolidated Balance Sheet 30 June 2006 Period 1.5.04 Year Ended to 30.6.06 30.6.05 restated Notes £ £ASSETS NON-CURRENT ASSETS Goodwill 11 774,413 -Other intangible assets 12 819,463 828,832Property, plant and equipment 13 311,637 83,168 1,905,513 912,000CURRENT ASSETS Inventories 15 395,193 224,710Trade and other receivables 16 931,306 546,489Cash and cash equivalents 17 173,930 1,212,112 1,500,429 1,983,311LIABILITIES CURRENT LIABILITIES Trade and other payables 18 825,426 1,045,467Financial liabilities - borrowings Bank overdrafts 19 54,228 58,838Interest bearing loans and borrowings 19 203,775 -Tax payable 191,975 10,526 1,275,404 1,114,831 NET CURRENT ASSETS 225,025 868,480 NON-CURRENT LIABILITIES Deferred tax 20 124,846 96,456 124,846 96,456 NET ASSETS 2,005,692 1,684,024 Tristel plc Consolidated Balance Sheet - continued30 June 2006 Period 1.5.04 Year Ended to 30.6.06 30.6.05 restated Notes £ £SHAREHOLDERS' EQUITY Called up share capital 21 238,368 238,368Share premium 22 1,455,980 1,455,980Merger reserve 22 478,526 478,526Profit and loss account 22 (167,182) (488,850) Total shareholders' equity 2,005,692 1,684,024 TOTAL EQUITY 2,005,692 1,684,024 The financial statements were approved by the Board of Directors on 10 October2006 and were signed on its behalf by: P F H Stephens - Director P M Barnes FCCA - Director Tristel plc Company Balance Sheet30 June 2006 Period 1.5.04 Year Ended to 30.6.06 30.6.05 restated Notes £ £ASSETS NON-CURRENT ASSETS Intangible assets 12 374,940 443,835Investments 14 1,546,885 465,000 1,921,825 908,835CURRENT ASSETS Trade and other receivables 16 112,182 63,205Cash and cash equivalents 17 98,006 1,212,089 210,188 1,275,294LIABILITIES CURRENT LIABILITIES Trade and other payables 18 52,257 336,388Financial liabilities - borrowings Bank overdrafts 19 51,757 -Interest bearing loans and borrowings 19 203,775 -Tax payable 43,577 10,526 351,366 346,914 NET CURRENT (LIABILITIES)/ASSETS (141,178) 928,380 NON-CURRENT LIABILITIES Deferred tax 20 22,673 14,724 NET ASSETS 1,757,974 1,822,491 SHAREHOLDERS' EQUITY Called up share capital 21 238,368 238,368Share premium 22 1,455,980 1,455,980Profit and loss account 22 63,626 128,143 Total shareholders' equity 1,757,974 1,822,491 TOTAL EQUITY 1,757,974 1,822,491 The financial statements were approved by the Board of Directors on 10 October2006 and were signed on its behalf by: P F H Stephens -Director P M Barnes FCCA - Director Tristel plc Cash Flow Statementfor the year ended 30 June 2006 Period 1.5.04 Year Ended to 30.6.06 30.6.05 restated Notes £ £Cash flows from operating activities Cash generated from operations 1 337,879 312,543Interest paid - (44,478)Interest element of hire purchase or finance lease - (315)rental payments Tax paid (10,533) - Net cash from operating activities 327,346 267,750 Cash flows from investing activities Purchase of intangible fixed assets (105,712) (197,838)Purchase of tangible fixed assets (235,897) (54,195)Purchase of fixed asset investments - -Sale of intangible fixed assets - -Sale of tangible fixed assets 13,000 8,027Disposal of subsidiary - (1,816)Purchase of subsidiary, net of cash acquired (1,080,885) -Interest received 35,372 5,775 Net cash from investing activities (1,374,122) (240,047) Cash flows from financing activities New loans in year - 20,000Loan repayments in year - (440,000)Loans written off - (3,714)Directors' loans (5,836) (7,952)Share issues - 1,596,575Share buyback - (75,000)Government grant received - 80,359Equity dividends paid (184,735) - Net cash from financing activities (190,571) 1,170,268 (Decrease)/Increase in cash and cash equivalents (1,237,347) 1,197,971 Cash and cash equivalents at beginning of year 2 1,153,274 (44,697) Cash and cash equivalents at end of year 2 (84,073) 1,153,274 Tristel plc Notes to the Cash Flow Statementfor the year ended 30 June 2006 1. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATINGACTIVITIES Period 1.5.04 Year Ended to 30.6.06 30.6.05 £ £ Operating profit 684,207 439,852Depreciation charges 168,238 64,902Loss on disposal of fixed assets 5,065 1,082Government grants (16,497) -Increase in inventories (53,961) (214,110)Increase in trade and other receivables (204,553) (190,723)(Decrease)/Increase in trade and other payables (244,620) 211,540 Net cash inflow from operating activities 337,879 312,543 2. CASH AND CASH EQUIVALENTS The amounts disclosed on the cash flow statement in respect of cash and cashequivalents are in respect of these balance sheet amounts: Year ended 30 June 2006 30.6.06 1.7.05 £ £Cash and cash equivalents 173,930 1,212,112Bank overdrafts (54,228) (58,838)Shareholders loan (203,775) - (84,073) 1,153,274 Period ended 30 June 2005 30.6.05 1.5.04 £ £Cash and cash equivalents 1,212,112 1Bank overdrafts (58,838) (44,698) 1,153,274 (44,697) 3. ACQUISITION OF SUBSIDIARY During the year the group acquired Vernagene Limited (now Tristel TechnologiesLtd). The fair value of assets acquired and liabilities assumed were as follows: £Cash 1,000Inventories 116,522Accounts receivable 180,264Property, plant and equipment 56,963Intangible assets 6,831Goodwill 774,413Trade and other payables (54,108)Total purchase price 1,081,885Less: Cash acquired 1,000 Cash flow on acquisition net of cash acquired 1,080,885 Tristel plc Notes to the Financial Statementsfor the year ended 30 June 2006 1. ACCOUNTING POLICIES Basis of preparation These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards and IFRIC interpretations and with those parts ofthe Companies Act 1985 applicable to companies reporting under IFRS. Thefinancial statements have been prepared under the historical cost convention andinclude restatement of comparatives as required for the implementation of IFRSfrom 1 May 2004. No significant changes to the group's accounting policies orfinancial position arises from the adoption of the new presentation. Basis of consolidation The group financial statements consolidate the accounts of Tristel plc for theyear ended 30 June 2006 and of its subsidiary undertakings for the year ended 30June 2006, or until date of disposal as applicable. The accounting year end ofTristel plc was extended to 30 June in 2005. On 5 June 2006 the Group acquired the whole of the issued share capital ofVernagene Limited and its name was changed to Tristel Technologies Limited on 28June 2006. The acquisition of this company has been accounted for using purchaseaccounting principles in accordance with International Financial ReportingStandard 3. The Tristel Technologies Limited results have been incorporated forthe period of ownership. Turnover Turnover is the total amount receivable by the group in the ordinary course ofbusiness with outside customers for goods shipped as a principal and forservices provided, excluding value added tax and trade discounts. Productrevenue is recognised upon shipment of product and service income is recognisedupon the relating services having been completed or over the term of thecontract where relevant. Goodwill Acquired goodwill is included at cost and subject to an annual impairmentreview. Intangible assets - patents and licences Patents and licences are included at cost and depreciated in equal annualinstalments over a period of ten years which is their estimated useful economiclife. Provision is made for any impairment. Intangible assets - research and development Research expenditure is written off as incurred. Development expenditure is alsowritten off, except where the directors are satisfied as to the technical,commercial and financial feasibility of individual projects. In such cases, theidentifiable expenditure is deferred and amortised over the period during whichthe Group is expected to benefit. Provision is made for any impairment. Property, plant and equipment Depreciation is provided at the following annual rates in order to write offeach asset over its estimated useful life or, if held under a finance lease,over the lease term, whichever is the shorter. Improvements to property - Straight line over the lease term Plant and machinery - 33% on cost Fixtures and fittings - 25% on cost and 20% on cost Motor vehicles - 25% on cost Inventories Inventories are valued at the lower of cost and net realisable value. Costincludes materials and direct labour. Net realisable value is based on estimatedselling price, less further costs expected to be incurred to completion anddisposal. Provision is made for obsolete and slow moving and defective itemswhere applicable. Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 1. ACCOUNTING POLICIES - continued Deferred tax Deferred tax is provided in full on timing differences which result in anobligation at the balance sheet date to pay more tax, or a right to pay lesstax, at a future date at rates expected to apply when they crystallise based oncurrent tax rates and law. Timing differences arise from the inclusion of itemsof income and expenditure in taxation computations in periods different fromthose in which they are included in the financial statements. Taxation Current taxes are based on the results shown in the financial statements and arecalculated according to local tax rules, using tax rates enacted orsubstantially enacted by the balance sheet date. Foreign currencies The financial statements are presented in Sterling and transactions in foreigncurrencies are recorded at the rate of exchange at the date of the transaction.Monetary assets and liabilities denominated in foreign currencies at the balancesheet date are reported at the rates of exchange prevailing at that date. Hire purchase and leasing commitments Assets obtained under hire purchase contracts or finance leases are capitalisedin the balance sheet. Those held under hire purchase contracts are depreciatedover their estimated useful lives. Those held under finance leases aredepreciated over their estimated useful lives or the lease term, whichever isthe shorter. The interest element of these obligations is charged to the income statementover the relevant period. The capital element of the future payments is treatedas a liability. Rentals paid under operating leases are charged to the income statement on astraight line basis. Pensions The group operates a defined contribution pension scheme. Contributions payablefor the year are charged in the income statement. Differences betweencontributions payable in the period and those actually paid are shown in thebalance sheet as accruals or prepayments. Government grants Government grants relating to fixed assets are treated as deferred income andreleased to the income statement over the expected useful lives of the assetsconcerned. Other grants are credited to the income statement as the relatedexpenditure is incurred. Share option related charges In accordance with UITF 17, the Group recognises a charge on employee shareoptions issued at below fair value, equal to the differential between the fairvalue and exercise price of the option. Borrowing costs Costs are charged to the income statement as incurred. 2. TURNOVER The turnover and profit before tax are attributable to the one principalactivity of the group. Tristel Plc Notes to the Financial Statements - continuedFor the year ended 30 June 2006 2. TURNOVER - continued Analysis of turnover by geographical market is given below: Period 1.5.04 Year Ended to 30.6.06 30.6.05 £ £ United Kingdom 3,709,915 2,970,682Rest of the World 35,765 38,433 Total 3,745,680 3,009,115 3. EMPLOYEES AND DIRECTORS Period 1.5.04 Year Ended to 30.6.06 30.6.05 £ £ Wages and salaries 553,317 405,636Social security costs 60,300 43,623Other pension costs 28,928 18,354 642,545 467,613 The average monthly number of employees during the year was as follows: Period 1.5.04 Year Ended to 30.6.06 30.6.05 Executive directors 2 1Non-executive directors 3 -Sales and marketing 7 6Administration 4 3 16 10 Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 3. EMPLOYEES AND DIRECTORS - continued In addition to the staff costs disclosed above, there were costs of £279,956included in 2005 as exceptional items comprising a UITF 17 charge of £207,600and related employers' National Insurance contributions of £72,356 associatedwith employee share options granted during the previous period. Period 1.5.04 Year Ended to 30.6.06 30.6.05 Directors' emoluments 216,092 150,788Aggregate gains made by directors on the exercise of share options - 759,687 Directors' pension contributions 17,704 7,000 The number of directors to whom retirement benefits were accruing was as follows: Defined contribution schemes 2 1 No directors exercised share options during the year (2005 - 3) Information regarding the highest paid director for the year ended 30 June 2006is as follows: Period 1.5.04 Year Ended to 30.6.06 30.6.05 £ £Emoluments etc 117,559 99,205Aggregate gains made on the exercise of share - 563,170options Pension contributions to money purchase schemes 11,700 7,000 4. EXCEPTIONAL ITEMS In accordance with UITF 17, £207,600 was charged to the profit and loss accountin 2005 in respect of employee share options grant and exercised during thatperiod, which was then credited to reserves. In addition, the group incurredemployer's National Insurance costs of £72,356 in respect of the share options.These costs were treated as exceptional as the options would not have vested hadthe company not been admitted to AIM in 2005. No options charge arises in 2006 as the market price of the company's shares atthe balance sheet date was below the option price. The group disposed of one of its subsidiaries in February 2005, resulting in aloss on consolidation of £22,275. Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 5. NET FINANCE INCOME Period 1.5.04 Year Ended to 30.6.06 30.6.05 £ £ Finance income: Deposit account interest 33,701 5,775 Other 1,671 - 35,372 5,775 Period 1.5.04 Year Ended to 30.6.06 30.6.05 £ £ Finance costs: Other interest - 36Loan interest - 38,849Hire purchase - 315 - 39,200 Net finance income/(cost) 35,372 (33,425) 6. PROFIT BEFORE TAX The profit before tax is stated after charging: Period 1.5.04 Year Ended to 30.6.06 30.6.05 £ £Cost of inventories recognised as expense 1,709,033 1,448,048Depreciation - owned assets 46,326 28,024Depreciation - assets on hire purchase contracts or finance leases - 2,054 Loss on disposal of fixed assets 5,065 1,082Patents and licences amortisation 74,488 34,824Development costs amortisation 47,424 -Auditors' remuneration 20,221 7,500Auditors' remuneration for non audit work - 3,090Foreign exchange differences 895 -Operating lease rentals: - land and buildings 15,000 18,026- vehicles and equipment 10,871 19,964Research costs expensed 59,213 109,970 In addition to the auditors' remuneration disclosed above, share issue costs of£49,700 were incurred in 2005 and included in the share premium account inrespect of work completed by the auditors relating to the company's admission toAIM. Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 7. TAX Analysis of the tax charge Period 1.5.04 Year Ended to 30.6.06 30.6.05 £ £Current tax: Corporation tax 183,779 10,526Prior year adjustment 7 - Total current tax 183,786 10,526 Deferred tax: Advance capital allowances 18,030 83,420Losses utilised 6,411 -Deferred grant income 4,949 (28,506) Total deferred tax 29,390 54,914 Total tax charge in income statement 213,176 65,440 Factors affecting the tax charge The tax assessed for the year is lower (2005 - lower) than the standard rate ofcorporation tax in the UK. The difference is explained below: Period 1.5.04 Year Ended to 30.6.06 30.6.05 £ £Profit on ordinary activities before tax 719,579 104,196 Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% (2005 - 30%) 215,874 31,259 Effects of: Expenses not deductible for tax purposes brought 2,586 18,961forward Capital allowances in excess of depreciation (18,030) (54,970)Losses utilised (6,411) -Grant income taxed on receipt (4,949) 24,107Effect of lower rate tax bands (1,744) (6,141)Enhanced relief on qualifying scientific (3,547) (2,690)research expenditure Current tax charge 183,779 10,526 Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 8. PROFIT/(LOSS) OF PARENT COMPANY As permitted by Section 230 of the Companies Act 1985, the profit and lossaccount of the parent company is not presented as part of these financialstatements. The parent company's profit for the financial year was £120,218(2005: £128,143, as restated). 9. DIVIDENDS Period 1.5.04 Year Ended to 30.6.06 30.6.05 £ £ restatedEquity shares: Paid Final for 2005 at 0.5p per share 119,184 -Interim for 2006 at 0.275p per share 65,551 - Proposed Final for 2006 at 0.725p per share 172,817 119,184 10. EARNINGS PER ORDINARY SHARE The calculations of earnings per share are based on the following profits andnumbers of shares: 2006 2005 Retained (loss)/profit for the financial £506,403 £38,756period Weighted average number of ordinary shares for basic earnings per share 23,836,820 16,050,830 Weighted average number of ordinary shares for diluted earnings per share 24,195,957 18,002,893 The calculation of the weighted average number of shares is based on the yearended 30 June. The calculation of diluted earnings per share excludesoutstanding options on 250,000 ordinary shares at 30 June 2006 which couldpotentially dilute earnings in the future because they were antidilutive for theyear as the exercise price of the options exceeded the fair average value of theshares during the year. Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 11. GOODWILL Group £ COST At 1 July 2005 -Additions 774,413 At 30 June 2006 774,413 AMORTISATION At 1 July 2005 -Amortisation for year - At 30 June 2006 -NET BOOK VALUE At 30 June 2006 774,413 At 30 June 2005 - Goodwill arises on the acquisition of Vernagene Limited in the period as thecompany has adopted the purchase method of accounting. Under UK GenerallyAccepted Accounting Practice, this asset would be set against the reserves ofthe group but IAS does not allow for this. The amount will be subjected toimpairment review. The net assets acquired were £307,472 and the total paid, including costs, was£1,081,885. Company The company has no goodwill to account for. 12. INTANGIBLE ASSETS Group Patents and Development licences costs Totals £ £ £COST At 1 July 2005 699,005 384,997 1,084,002Additions 5,497 100,215 105,712Acquisition of subsidiary 10,015 - 10,015 At 30 June 2006 714,517 485,212 1,199,729 AMORTISATION At 1 July 2005 255,170 - 255,170Amortisation for year 74,488 47,424 121,912Acquisition of subsidiary 3,184 - 3,184 At 30 June 2006 332,842 47,424 380,266 NET BOOK VALUE At 30 June 2006 381,675 437,788 819,463 At 30 June 2005 443,835 384,997 828,832 Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 12. INTANGIBLE ASSETS - continued Company Patents and licences £COST At 1 July 2005 699,005Additions 5,497 At 30 June 2006 704,502 AMORTISATION At 1 July 2005 255,170Amortisation for year 74,392 At 30 June 2006 329,562 NET BOOK VALUE At 30 June 2006 374,940 At 30 June 2005 443,835 13. PROPERTY, PLANT AND EQUIPMENT Group Improvements Fixtures to Plant and and Motor property machinery fittings vehicles Totals £ £ £ £ £ COST At 1 July 2005 16,205 23,460 63,699 47,292 150,656 Additions 5,024 132,962 10,548 87,363 235,897 Acquisition of - 133,902 17,888 - 151,790 subsidiary Disposals - - (2,298) (35,682) (37,980) At 30 June 2006 21,229 290,324 89,837 98,973 500,363 DEPRECIATION At 1 July 2005 3,301 17,576 30,976 15,635 67,488 Charge for year 3,659 8,638 14,474 19,555 46,326 Acquisition of - 77,642 17,185 - 94,827 subsidiary Eliminated on - - (2,030) (17,885) (19,915) disposal At 30 June 2006 6,960 103,856 60,605 17,305 188,726 NET BOOKVALUE At 30 June 2006 14,269 186,468 29,232 81,668 311,637 At 30 June 2005 12,904 5,884 32,723 31,657 83,168 Company - There are no tangible fixed assets held by the company. Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 14. INVESTMENTS Company Shares in group undertakings £COST At 1 July 2005 465,000Additions 1,081,885 At 30 June 2006 1,546,885 At 30 June 2005 465,000 The group or the company's investments at the balance sheet date in the sharecapital of companies include the following: Subsidiary Tristel Solutions Limited Country of incorporation: England and Wales Nature of business: Supply of infection control products % Class of shares: holding Ordinary 100.00 £ £ Aggregate capital and reserves 683,976 326,532Profit /(loss) for the year/period 357,444 (46,278) Tristel Technologies Limited Country of incorporation: England and Wales Nature of business: Supply of water purification and disinfecting products % Class of shares: holding Ordinary 100.00 2006 30.06.05 £ £ Aggregate capital and reserves 333,072 -Result for the period of ownership 25,600 - 15. INVENTORIES Group 2006 2005 £ £ Raw materials 50,087 24,969Work-in-progress 128,940 67,233Finished goods 216,166 132,508 395,193 224,710 Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 16. TRADE AND OTHER RECEIVABLES Group Company 2006 2005 2006 2005 £ £ £ £ Current: Trade debtors 710,321 459,411 - -Other debtors 47,775 29,133 27,628 27,628Amount due from group undertakings - - 30,101 -VAT 14,334 - 14,334 32,509Prepayments and accrued income 158,876 57,945 40,119 3,068 931,306 546,489 112,182 63,205 No allowance has been made for estimated irrecoverable amounts from the sale ofgoods. This position has been determined by reference to past defaultexperience. The directors consider that the carrying amount of trade and other receivablesapproximates to their value. The credit risk on the group is primarilyattributable to its trade receivables. The amounts in the balance sheet are netof allowances for doubtful receivables. An allowance for impairment had beenmade where there is an identifiable loss event which, based on previousexperience, is evidence of a reduction in the recoverability of the cash flows. 17. CASH AND CASH EQUIVALENTS Group Company 2006 2005 2006 2005 £ £ £ £ Cash in hand 1,300 23 - -Bank deposit account 91,055 1,000,000 91,055 1,000,000Money market deposit 6,951 - 6,951 -Bank accounts 74,624 212,089 - 212,089 173,930 1,212,112 98,006 1,212,089 Cash and cash equivalents comprise cash held by the group and short term bankdeposits with an original maturity of three months or less. The carrying amountof these assets approximates to their fair value. The credit risk on the group's principal financial assets, bank balances andcash and trade and other receivables has been assessed. That on liquid funds andfinancial instruments is limited because the holders are banks with high creditratings assigned by international credit rating agencies. Tristel plc Notes to the Financial Statements - continued for the year ended 30 June 2006 18. TRADE AND OTHER PAYABLES Group Company 2006 2005 2006 2005 £ £ £ £ restated restated Current: Trade creditors 400,917 358,867 36,446 - Amounts owed to group - - - 98,570 undertakings Social security and other taxes 126,124 100,557 - 1,838 Other creditors 14,468 238,630 12,472 235,980 Accruals and deferred income 283,690 341,350 3,339 - Directors' current accounts 227 6,063 - - 825,426 1,045,467 52,257 336,388 19. FINANCIAL LIABILITIES - BORROWINGS Group Company 2006 2005 2006 2005 £ £ £ £ Current: Bank overdrafts 54,228 58,838 51,757 - Directors' current accounts 203,775 - 203,775 - 258,003 58,838 255,532 - Terms and debt repayment schedule Group 1 year or less £ Bank overdrafts 54,228 The average interest rates paid 2006 2005 were: Bank overdraft 8% 8% Shareholders loan 203,775 - Interest is payable at US Prime Rate. Borrowings are arranged at floating rates thus exposing the company to cash flowinterest rate risk. The directors consider that the borrowings are shown attheir fair values. Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 20. DEFERRED TAX Group 2006 2005 £ £Balance at 1 July 96,456 41,542Acquisition of subsidiary (1,000) -Accelerated capital allowances 18,030 54,970Deferred grant income 4,949 (24,107)Utilisation of losses 6,411 -Increase in tax rate - 24,051 Balance at 30 June 124,846 96,456 Company 2006 2005 £ £Balance at 1 July 14,724 -Accelerated capital allowances 7,949 14,724 Balance at 30 June 22,673 14,724 21. CALLED UP SHARE CAPITAL Authorised: Number: Class: Nominal 2006 2005 value: £ £ 60,000,000 Ordinary 1p 600,000 600,000 Allotted, issued and fully paid: Number: Class: Nominal 2006 2005 value: £ £ 23,836,820 Ordinary 1p 238,368 238,368 At 30 June 2006 there were 940,000 shares that had been granted under shareoptions and had not been taken up at that date (2005: none). Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 22. RESERVES Group restated Profit and loss Share Merger account premium reserve Totals £ £ £ £ At 1 July 2005 restated (488,850) 1,455,980 478,526 1,445,656 Profit for the year 506,403 - - 506,403 Dividends (184,735) - - (184,735) At 30 June 2006 (167,182) 1,455,980 478,526 1,767,324 Company restated Profit and loss Share Merger account premium reserve Totals £ £ £ £ At 1 July 2005 restated 128,143 1,455,980 - 1,584,123 Profit for the year 120,218 - - 120,218 Dividends (184,735) - - (184,735) At 30 June 2006 63,626 1,455,980 - 1,519,606 Only the profit and loss account is distributable as the other reserves are of acapital nature. 23. TRANSACTIONS WITH DIRECTORS During the year Paul Swinney was granted an option over 250,000 of the company'sordinary shares this option is at a price of 59.5p and is exercisable at anytime up to 23 December 2015. 24. RELATED PARTY DISCLOSURES Transactions between the Group and Bruce Green Under the terms of a technology licence agreement between the Group and BruceGreen, a shareholder in the Company, royalties of £145,583 (2005: £120,535) werepaid during the year ended 30 June 2006 to Bruce Green Limited, a company ownedby Mr. Green. Tristel plc Notes to the Financial Statements - continuedfor the year ended 30 June 2006 25. LEASING COMMITMENTS The following annual commitments under non-cancellable operating leases: Group and company 2006 2005 Land and Plant and Land and Plant and buildings machinery buildings machinery £ £ £ £ Expiring in two to five years 15,000 6,411 15,000 6,411 Expiring in more than five 26,708 - - - years 26. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Group 2006 2005 £ £ restated Profit for the financial year 506,403 38,756 Dividends (184,735) - 321,668 38,756 New share capital subscribed - 1,666,719 Share related charges (UITF 17) - 207,600 Purchase of own shares - (75,000) Net addition to shareholders' funds 321,668 1,838,075 Opening shareholders' funds 1,684,024 (154,051) Closing shareholders' funds 2,005,692 1,684,024 Equity interests 2,005,692 1,684,024 Company 2006 2005 £ £ restated Profit for the financial year 120,218 128,143 Dividends (184,735) - (64,517) 128,143 New share capital subscribed - 1,694,347 Net (reduction)/addition to shareholders' funds (64,517) 1,822,490 Opening shareholders' funds 1,822,491 1 Closing shareholders' funds 1,757,974 1,822,491 Equity interests 1,757,974 1,822,491 Copies of the annual reports are vailabe from the Company's registered office:Lynx Business Park, Fordham Road, Snailwell, Cambridgeshire, CB8 7NY, UnitedKingdom This information is provided by RNS The company news service from the London Stock Exchange