Tristel Regulatory News (TSTL)

TRISTEL plc

("Tristel" or the "Company")

Unaudited Interim Results for the six months ended 31 December 2013

Tristel plc (AIM: TSTL), the manufacturer of infection prevention, contamination control and hygiene products, announces its interim results for the six months ended 31 December 2013.

Tristel's lead technology is a proprietary Chlorine dioxide formulation and the Company addresses three distinct markets:

· The Human Healthcare market (hospital infection prevention - via the Tristel brand)

· The Contamination Control market (control of contamination in critical environments - via the Crystel brand)

· The Animal Healthcare market (veterinary practice infection prevention - via the Anistel brand)

Financial highlights

· Revenue up 46% to £6.4m (2012: £4.4m)

· Gross margin increase to 70% (2012: 64%)

· Pre-tax profit of £0.7m (2012: adjusted* pre-tax loss £0.6m)

· International sales up 45% to £2m (2012: £1.4m)

· Basic EPS of 1.03p (2012: 4.73p loss)

· Interim dividend of 0.36p per share (2012: 0.08p)

· Strong cash flow with £1.6m generated from operations (2012: outflow of £0.5m)

· Net cash of £1.5m (2012: net borrowings £0.4m)

*Adjusted for non-recurring items of £2.02m

Commenting on current trading, Paul Swinney, Chief Executive of Tristel, said:

"We report a profit of £0.7m for the first half in marked contrast to an adjusted loss of £0.6m last year. The progress that we have made during the first half is a continuation of the recovery that started in the second half of last financial year and reflects the reshaping of the business that we have undertaken over the past two years. Revenue growth has been achieved in all areas and the progress made in the first six months has continued, with a strong start to 2014."

The Company will be hosting an investor results presentation on Tuesday, 4 March 2014. This event is open to all investors and will be held from 16:30 at the Black Bar, Rocket, 6 Adams Court, EC2N 1DX followed by drinks and canapés. To register to attend this event please email: tristel@walbrookpr.com.

Chairman's Statement

Eighteen months ago we undertook a detailed review of our business to effect its transformation from one that had been almost exclusively dependent upon Tristel's declining legacy products used in endoscopy departments in UK hospitals, to a more broadly diversified business focussed on a number of key growth markets and geographies. We also sought to reduce our cost base and achieve positive cash flow in all our overseas operations. 

The key to this transformation remains our unique Chlorine dioxide technology that differentiates us from our competitors. The first half performance to 31 December 2013 is an indication that the transformation is being executed successfully. As a result, Tristel is now in a much stronger position, with a diverse portfolio of profitable interests that span a number of infection and contamination control markets in targeted geographies. 

First half revenue increased by 46% to £6.4m (2012: £4.4m) and profit before tax of £0.7m compares to an adjusted loss before tax of £0.6m at last year's half year stage. The first half performance represents a continuation of the progress made in the second half of last financial year and is a result of the growth in global sales of products that we launched in anticipation of the decline of our legacy endoscopy range.

Human Healthcare

Sales of products used to decontaminate the smaller medical instruments that we now focus on grew by 86% to £2.2m (2012: £1.2m) in the UK and 40% to £1.5m (2012: £1.1m) in overseas markets. This growth has been led by the Tristel Wipes System which has, the Board believes, become the most widely used decontamination method in UK hospital departments such as ENT, cardiology and ultrasound. It has also gained significant footholds outside the UK, particularly in Germany, Italy and Australia. Sales of our surface disinfection products, which are unique in their use of Chlorine dioxide on hospital floors and walls, have grown globally by 91% to £0.8m (2012: £0.4m).

Contamination Control

In 2011 we invested in a state of the art clean room manufacturing facility at our Newmarket headquarters. This capability has allowed us to enter the market for the control of microbial contamination in pharmaceutical manufacturing environments, hospital aseptic units and laboratories. Sales of the product range that we have created for this application, branded Crystel, have increased by 54% for the half year to £0.6m (2012: £0.2m) and we anticipate further growth.

Animal Healthcare

Having established a market leading position with our Anistel brand of disinfectants in the UK veterinary market, we now offer the Chlorine dioxide technology that we provide for human healthcare to veterinary surgeries. We believe that the unique advantages provided by Chlorine dioxide will create growth opportunities within the animal healthcare sector of our business both in the UK and overseas, although the characteristics of this market probably limits its future potential compared to human healthcare. 

Future developments

The Group's brands, Tristel, Crystel and Anistel are now established in many of the key healthcare markets in Europe, the Middle East, Asia and Australasia. The opportunity remains for further growth through the current product range and via further product innovation. Reflecting our commitment to innovation we received 37 new patent grants in 2013 and 72% of first half Group revenues derived from products that enjoy patent protection. Examples of new developments which extend the life cycle of our Chlorine dioxide products and their application include:

· Tristel Trace. This new version of our Wipes System provides barcoding and electronic traceability which will add to the product's appeal and extend its intellectual property protection.

· Tristel Revolver. It is anticipated that this new delivery system for Chlorine dioxide will revolutionise the use of disinfectants in aseptic units.

Dividend

As a statement of confidence in the Group's future prospects we are declaring an interim dividend of 0.36p (2012: 0.08p) payable on 14 April 2014 to shareholders on the register at 28 March 2014. The corresponding ex-dividend date is 26 March 2014.

Outlook

Whilst it is relatively early days in Tristel's return to a sustainable growth trajectory, we are pleased with the progress that has been made and believe that we have established a stronger, broader and more resilient base from which to move forward. The results for the first half of this year are encouraging but do not reflect the ambition we have for the Group. They represent, in our view, the early shoots of the success we believe is to come.

Christopher Samler

Non-Executive Chairman

3 March 2014

All amounts relate to continuing operations.

1. PRINCIPal ACCOUNTING POLICIES

Basis of Preparation

For the year ended 30 June 2013, the Group prepared consolidated financial statements under International Financial Reporting Standards ('IFRS') as adopted by the European Commission. These will be those International Accounting Standards, International Financial Reporting Standards and related interpretations (SIC-IFRIC interpretations), subsequent amendments to those standards and related interpretations, future standards and related interpretations issued or adopted by the IASB that have been endorsed by the European Commission. This process is ongoing and the Commission has yet to endorse certain standards issued by the IASB.

These condensed consolidated interim financial statements (the interim financial statements) have been prepared under the historical cost convention. They are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU) and which are, or are expected to be, effective at 30 June 2014. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 June 2013. The interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 30 June 2013. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.

Accounting Policies

The interim report is unaudited and has been prepared on the basis of IFRS accounting policies.

The accounting policies adopted in the preparation of this unaudited interim financial report are the same as the most recent annual financial statements being those for the year ended 30 June 2013.

2 Publication of non-statutory accounts

The financial information for the six months ended 31 December 2013 and 31 December 2012 has not been audited and does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006.

The financial information relating to the year ended 30 June 2013 does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006. This information is based on the Group's statutory accounts for that period. The statutory accounts were prepared in accordance with International Financial Reporting Standards ("IFRS") and received an unqualified audit report and did not contain statements under Section 498(2) or (3) of the Companies Act 2006. These financial statements have been filed with the Registrar of Companies.

3 NON-RECURRING ITEMS

Non-recurring items disclosed for prior periods are costs which are separately disclosed within profit and loss by virtue of their size or incidence in order to enable full understanding of the Group's financial performance. Transactions which may have given rise to non-recurring costs include restructuring costs, provisions for write down and impairments. Further information for the costs incurred in prior periods can be found within the annual financial statements for the year ended 30 June 2013, or in the table below:

4 SEGMENTAL ANALYSIS

The Board considers the Group's revenue lines to be split into three operating segments, which span the different Group entities. The operating segments consider the nature of the product sold, the nature of production, the class of customer and the method of distribution. The Group's operating segments are identified from the information which is reported to the chief operating decision maker.

The first segment concerns the manufacture, development and sale of infection control and hygiene products which incorporate the Company's chlorine dioxide chemistry, and are used primarily for infection control in hospitals ("Human Health"). This segment generates approximately 86% of Group revenues.

The second segment, which constitutes 5% of the business activity, relates to manufacture and sale of disinfection and cleaning products, principally into veterinary and animal welfare sectors ("Animal Health"). 

The third segment addresses the pharmaceutical and personal care manufacturing industries ("Contamination Control"). This activity has generated 9% of the Group's revenue for the period.

Within the hospital community, different aspects of infection control can be categorised into "vectors" or "routes of transmission" of infection. References to these "vectors" are made within the Chairman's statement. However, the Group does not report separately upon the vectors within its internal management information, and does not consider them to be separate sectors for the purposes of IFRS 8.

The operation is monitored and measured on the basis of the key performance indicators of each segment, these being revenue and gross profit; strategic decisions are made on the basis of revenue and gross profit generating from each segment.

The Group's centrally incurred administrative expenses, operating income, assets and liabilities are not attributable to individual segments.

4 SEGMENTAL ANALYSIS - continued

5 EARNINGS PER SHARE

The calculations of earnings per share are based on the following profits and number of shares:

6 Dividends

The proposed interim dividend has not been included as a liability in the financial statements.

7 RECONCILIATION OF PROFIT BEFORE TAX to cash GENERATED from operations