Tristel Regulatory News (TSTL)

Tristel plc

("Tristel" or the "Company")

Trading update and notice of results

Tristel plc (AIM: TSTL), the manufacturer of infection prevention, contamination control and hygiene products, provides the following trading update for the six months ended 31 December 2012.

As highlighted in our preliminary statement, we continue to build our branded product ranges, directly addressing three distinct markets, Human Healthcare, Animal Healthcare and Contamination Control. This strategy, and the significant investment in our manufacturing capability, was to address the anticipated further decline in our legacy endoscopy disinfectant business.

Whilst the endoscopy business performed well prior to our year end there has been a sharper than expected decline in recent months and it has now become apparent that it will not recover to the levels anticipated. Accordingly management now expects a much lower level of endoscopy revenues in this financial year. This will result in an adjusted pre-tax loss* for the six months to 31 December 2012 of approximately £0.6m although management are confident of a profitable (pre-exceptional) full year to 30 June 2013

Other business segments performed in line with management expectations, with the exception of China and the UK veterinary business. In China the acceleration of sales has been slower than expected, however the operation has been restructured and streamlined, and the portfolio of approved products has been expanded following the licence grant for the Wipes System. The veterinary market in the United Kingdom has seen solid progress but behind internal forecasts. Elsewhere, the Company is achieving significant growth in the sale of its Wipes System for use in ultrasound departments. 

Underlining its confidence in the Company's prospects, the Board proposes to maintain its dividend policy, paying an interim dividend of 0.08p per share in April 2013. Tristel had a small overdraft at the half year, but expects to be cash generative in the second half and remains well capitalised to drive its future growth.

Legacy Disinfectant Business

The shortfall in revenue during the period is largely due to Tristel's legacy endoscopy disinfectant products, which are used in washing machines manufactured and supplied to NHS hospitals by third parties. The long-term trend has been for these washing machine manufacturers to insist that hospitals use their own proprietary disinfectants and the publication of new Department of Health guidelines for endoscope decontamination has undoubtedly had a significant effect on the decline of Tristel's stand-alone disinfectant sales.

Management has therefore taken the decision to exit this market segment over time to remove any future uncertainly in revenues and to focus its involvement in instrument decontamination on smaller single and non-lumened devices, which have proven very successful in recent years. The Company will continue its current focus on new growth markets such as contamination control in critical environments. In exiting the endoscopy business, the Company will write off the residual values of certain assets, and this will lead to an exceptional charge of approximately £2m in the interim results.

Outlook

During the period, the Board has carried out a detailed review of all business areas and taken proactive steps to stream-line its operations in China and restructure its direct sales model within the UK animal health markets, which has reduced annualised costs by approximately £0.6m. The Company looks forward to a strong second half and further growth in 2014 and beyond.

The results for the six months ended 31 December 2012 will be released on 4 March 2013.

*Before exceptional and non-cash items

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