Acquisition & Trading Update

23 May 2006 07:03

Tristel PLC23 May 2006 Tristel plc £1m acquisition of Vernagene Limited Trading update Tristel plc ("Tristel"), the healthcare business which uses its proprietarychlorine dioxide chemistry to create infection control products for hospitals,announces that it has exchanged contracts for the acquisition of VernageneLimited ("Vernagene"), the chlorine dioxide specialist focusing on the watertreatment and food processing industries, for £1m. The acquisition will beimmediately earnings enhancing. It is anticipated that, subject to satisfaction of certain conditions precedent,the acquisition will be completed shortly. Vernagene, which is based in Bolton, focuses on water treatment and purificationand hygiene control within the food processing industry. It has been divested byVerna Group Holdings Limited. Vernagene employs six people and in the year ended 31 March 2006 achieved salesof £1,177,000 (2005: £1,145,000 and 2004: £906,000) and pre-tax profits of£301,000. As at 31 March 2006, Vernagene had net assets of £289,000. Tristel haspurchased the share capital of the company for £1m in cash and may pay anadditional sum of up to £100,000 on an earn-out basis. The acquisition will befunded using existing cash resources (i.e. surplus cash from flotation andoperations) and a short term loan of £200,000 from one of its shareholders. TheCompany intends to refinance this loan with commercial bank term debt. CurrentlyTristel has no debt. The acquisition will extend Tristel's reach beyond the infection control marketin hospitals, where it has focused its activities to date, enabling it to expandinto new markets where chlorine dioxide is increasingly being used. Vernagenehas approximately 200 customers in the government, municipal, industrial,healthcare and food sectors. Importantly, Vernagene provides water treatmentsolutions to approximately 40 UK hospitals, where its products are used forLegionella control, whilst Tristel supplies approximately 400 hospitals with itsinstrument and surface disinfection products. The Board believes there will besignificant cross selling opportunities. The acquisition will also present an opportunity for Tristel to apply its salesand marketing skills to the Vernagene product offering as well as theopportunity to combine Tristel's patented technology and unique delivery systemswith Vernagene's chlorine dioxide chemistry. Trading Update In Tristel's core domestic hospital business, the financial problems of theNational Health Service caused many hospitals to reduce their purchases andinventories during the last three months of the NHS financial year (ended March2006). NHS sales have now returned to the levels seen before the NHS expenditurecrunch. However, the significant de-stocking experienced will have some effectupon the Company's results for the year ending 30th June 2006. For the current financial year ending 30 June 2006, Tristel expects post taxprofits to grow significantly from £38,756 (after UITF 17 exceptional) in 2005to at least £500,000, producing earnings per share of at least 2.1 pence (2005:0.24 pence), before any contribution from the acquisition. In addition, the Company confirms its intention to pay a final dividend of 0.725pence, making a 1 pence dividend payment for the year. Despite the short term effects of the above the Board believes that Tristel hasconsiderable growth prospects through expansion into new market sectors, throughthe co-branding opportunities announced at the interims stage, and throughexpansion into further overseas markets. Since the announcement of the interimresults in February, the Company has appointed distributors in Malaysia,Thailand, Iran, Greece, Bulgaria and Romania. Tristel is now distributed in 15overseas markets and will continue to pursue international expansion vigorously. ENDS Tristel plc Parkgreen Communications LtdPaul Swinney, Chief Executive Paul McManus (paul.mcmanus@binnspr.co.uk)Paul Barnes, Finance Director Ben Knowles (ben.knowles@binnspr.co.uk)Tel: 01638 721500 Tel 020 7786 9600http://www.tristel.com Mob: 07980 541 893 This information is provided by RNS The company news service from the London Stock Exchange