TIDMTSTL

RNS Number : 9990P

Tristel PLC

16 October 2019

Tristel plc

("Tristel", the "Company" or the "Group")

Final Results

Results for the year ended 30 June 2019

Tristel plc (AIM: TSTL), the manufacturer of infection prevention and contamination control products, announces its unaudited results for the year ended 30 June 2019.

Financial Highlights

-- Turnover up 18% to GBP26.2m (2018: GBP22.2m)

-- Overseas sales up 26% to GBP14.4m (2018: GBP11.4m), representing 55% of total sales (2018: 51%)

-- EBITDA before share-based payments up 15% to GBP7.1m (2018: GBP6.2m). Unadjusted GBP6.3m (2018: GBP5.5m)

-- Pre-tax profit before share-based payments up 19% to GBP5.6m (2018: GBP4.7m). Unadjusted GBP4.7m (2018: GBP4m)

-- Pre-tax margin before share-based payments remained at 21% (2018: 21%). Unadjusted 18% (2018: 18%)

-- Adjusted EPS 11.08p up 21% (2018: 9.16p)

-- Basic EPS 9.14p up 20% after share-based payments of GBP0.85m (2018: GBP0.66m)

-- Dividend per share for the full year increased by 21% to 5.54p (2018: 4.58p)

-- Net cash of GBP4.2m (2018: GBP6.7m) after GBP4.7m spent on acquisitions. Company remains debt free

Operational Highlights

-- Acquisition in November 2018 of the Company's distributors in Belgium, the Netherlands and France, and in July 2019 of its Italian distributor. All are trading in line with expectations

-- New 23,000 sq ft warehouse in Newmarket and 14,000 sq ft warehouse in Antwerp fully operational

-- Awaiting feedback from USA FDA to De Novo pre-submission request

Paul Swinney, Chief Executive of Tristel plc, said: "We made solid progress during the year. Top-line growth was driven by our overseas operations and this trend should continue with the acquisition of four of our main European distributors during the year and shortly after the year-end. We were also pleased with 9% sales growth in the United Kingdom which was higher than in recent years. Our direct involvement in the French ultrasound market has been very timely with the publication of new guidelines in the early Summer. We have built a seven-strong salesforce to take advantage of buoyant demand conditions. Our progress in developing both sales and the sales team in China and Hong Kong is encouraging, focussing our efforts in the near term on the private hospital sector whilst we wait for new ultrasound disinfection guidelines to be published which will impact the public sector.

"We are advancing our De Novo submission for Duo to the USA Food and Drug Administration and are awaiting feedback to our most recent pre-submission request to the agency. We expect to receive this before the end of 2019."

 
For further information: 
 
Tristel plc                                                      Tel: 01638 721 500 
Paul Swinney, Chief Executive 
Liz Dixon, Finance Director 
 
Walbrook PR Ltd                        Tel: 020 7933 8780 or tristel@walbrookpr.com 
Paul McManus                                                     Mob: 07980 541 893 
Lianne Cawthorne                                                 Mob: 07584 391 303 
 
FinnCap                                                          Tel: 020 7600 1658 
Geoff Nash / Giles Rolls (Corporate 
 Finance) 
Alice Lane (ECM) 
 

Chairman's Statement

We made solid progress during the year to 30 June 2019. Sales grew to GBP26.2m from GBP22.2m in 2018, an increase of 18%. The proportion of our revenue generated in overseas markets continued to increase and reached 55% in the year (2018: 51%). Overseas sales grew by 26% whilst UK sales grew by 9%. This difference in the pace of growth, across our various markets, reflects the higher market penetration in the United Kingdom than so far achieved in overseas markets.

In November 2018 we acquired our three distributors in Belgium, the Netherlands and France. During the seven and a half months leading up to 30 June that they were under our ownership, they registered sales of GBP2.1m. If they had continued as our distributors, we estimate that they would have purchased GBP0.4m of Tristel products from us during that period, and so we estimate that the acquisition has impacted the financial year by increasing sales by GBP1.7m. If the acquisition had not taken place, our reported sales growth would have been 10%, rather than 18%.

Pre-tax profit before share-based payments was GBP5.6m compared to GBP4.7m last year, an increase of 19%. (Unadjusted pre-tax profit of GBP4.7m compared to GBP4m last year, an increase of 18%.) Our pre-tax profit margin, which is a key measure of our performance, and before share-based payments, remained at 21%, while pre-tax profit margin also remained consistent at 18%. Adjusted earnings per share (EPS), before share-based payments, were 11.08 pence, up from 9.16 pence last year. Basic EPS were 9.14 pence, a 20% increase from last year, after a share-based payment charge of GBP0.852m (2018: GBP0.665m). This charge is a non cash item.

The Group has continued to be highly cash generative and on 30 June 2019 the cash balance was GBP4.2m (2018: GBP6.7m), notwithstanding the acquisition during the year of its three distributors in Belgium, the Netherlands and France which involved a cash outlay of GBP4.7m. In line with the Company's ordinary dividend policy, the Board is recommending that the final dividend is 3.50 pence (2018: 2.98 pence), an increase of 17%. Including the interim dividend of 2.04 pence (2018: 1.60 pence), and the proposed final dividend, the total dividend for the year will be 5.54 pence (2018: 4.58 pence), an increase of 21%.

We continued to invest for future growth. During the year we spent GBP0.5m on product development and testing (2018: GBP0.5m) and GBP0.2m on intellectual property protection (2018: GBP0.2m). Both these expenditures are held in intangible assets. We invested GBP0.7m (2018: GBP1.0m) in regulatory and product enhancement programmes where we have recognised this cost as an expense. Included in this cost is an amount of GBP0.5m (2018: GBP0.5m) relating to our initiative to enter the United States market which commenced in 2014. The cumulative investment in this regulatory project and in the establishment of a commercial structure within the country has been GBP1.7m.

Whilst no revenues have yet been generated from the United States, significant progress has been made to build a commercial platform from which to enter the market. During the year we continued to generate data required for a submission which we intend to make to the Food and Drug Administration (FDA) to obtain pre-market approval for our foam-based Duo product as a high-level disinfectant for medical devices. We have already received approvals from the Environmental Protection Agency (EPA) for Duo. We have entered into a partnership with Parker Laboratories based in New Jersey by which we have put in place manufacturing capability and a national distribution network. We do not yet have employees in the United States but have established a subsidiary.

This is my first address as Chairman, having succeeded Francisco Soler at last December's Annual General Meeting. To further develop our Board of Directors we have appointed Dr Bruno Holthof as an independent Non-Executive Director. Bruno is Chief Executive of Oxford University Hospitals NHS Trust.

As I look back upon my first ten months as Chairman, I believe that the Group has successfully navigated its way through a year in which Brexit was anticipated to take place, an event which posed significant challenges, particularly in terms of manufacture. Brexit is yet to occur and has been pushed back, and we expect the challenges it brings to repeat this financial year. However, I believe the Group is well-placed to weather this and any economic downturn that may follow. Finally, I would like to pay tribute to and thank all our employees who have given great service to the Company during the year.

Paul Barnes

Chairman

15 October 2019

Chief Executive's Report

Overview

Group revenue was up 18%, adjusted pre-tax profit was up 19% (pre-tax profit up 18%) and adjusted EPS was up 21% (basic EPS up 20%). We ended the year with cash of GBP4.2m. The Group is debt-free.

In October 2016, we set out our financial plan for the three years to 30 June 2019. The two key financial targets of the plan were sales growth in the range of 10% to 15% per annum as an annual average over the three years, and the achievement in each year of a pre-tax profit margin (excluding share-based payment charges) of at least 17.5%. Both targets became Key Performance Indicators (KPIs) of the Group. We can report that both these KPI's have been met throughout the three years.

On 18 November 2018 we acquired three companies, known to us as the Ecomed Group ("Ecomed"), and consisting of Ecomed Services N.V. (Belgium), Ecomed Nederlands B.V. (Netherlands), and Ecomed SARL (France). Each of the three companies have been distributors of Tristel products: since 2005 in Belgium; since 2013 in the Netherlands and 2016 in France. The companies have each changed their corporate name to "Tristel" and represent Tristel Western Europe in our organisational structure.

During the year the Ecomed acquisition contributed GBP1.7m to Group sales. If the three companies had continued as distributors and the acquisition had not taken place, Group sales would have been GBP24.46m and sales growth would have been 10%.

Strategically, the acquisition expands our direct presence throughout much of continental Europe, and our coverage was further increased shortly after the year-end with the acquisition of the remaining 80% of the share capital of Tristel Italia Srl, bringing this company under our complete ownership and control.

The management teams of our Western Europe and Italian acquisitions are continuing as part of the Group management and sales team. All four companies are essentially sales organisations and have boosted the UK and European sales force to 30, and the global sales force to 41. The total Group-wide headcount at 30 June 2019 was 146. The Ecomed acquisition has also added a 14,000 sq. ft. warehouse facility in Antwerp to our Group's logistics infrastructure.

We are proposing a final dividend of 3.50 pence per share (2018: 2.98 pence), making 5.54 pence (2018: 4.58 pence) in total for the year, an increase of 21%. If approved, the final dividend will be paid on 20 December 2019 to shareholders on the register at 22 November 2019. The corresponding ex-dividend date is 21 November 2019.

Our business: What our marketplace looks like

Our entire business is focussed on preventing the transmission of microbes from one object or person to another. We pursue this purpose because microbes can be a source of infection to humans and animals. They can cause illness or death and place a heavy cost on individuals and society. We achieve our purpose by applying a very powerful disinfectant - chlorine dioxide - to the target surface or medical instrument.

We are unique worldwide in using chlorine dioxide as a high-performance disinfectant for medical instruments. We are also one of a very few companies worldwide that can legitimately claim to be exclusively an infection prevention business.

Our mission is most relevant to hospitals where the risks of infection to individuals are highest. In the hospital market, which we refer to as human healthcare, we brand our products Tristel. The risk of cross infection is also relevant to veterinary practices, or animal hospitals, and in the animal healthcare market we brand our products Anistel. Finally, the control of microbial contamination is also very relevant in critical manufacturing environments, for example cleanrooms, and in this market our products are branded Crystel.

A hospital is a vast, multi-faceted organisation. We are not only unique in providing chlorine dioxide as a high-performance disinfectant within hospitals, but we are also unique in our focus upon specific clinical departments within them. We target clinical departments that carry out diagnostic procedures with small heat-sensitive medical instruments. These include: the nasendoscope used in Ear, Nose and Throat departments; the laryngoscope blade used in emergency medicine; tonometers used in ophthalmology, and ultrasound probes used in both women and men's health. In these departments, we are the only simple to implement, affordable, high-performance disinfection method available. Consequently, in geographical markets in which we have been present for some time, we hold a truly significant market share.

Infection prevention is a basic requirement for the safe and effective provision of healthcare. This is true in all hospitals in all countries. Our primary focus is on the acute hospital, but the trend is for medical device procedures to take place outside of the hospital, and the pool of opportunity for the sale of our products can be expected to expand substantially over the long term.

Brexit cast its spell over the year. To forestall any potential disruption to our customers' supply chain we built inventory of all component parts and finished products in the run up to 31 March and encouraged key domestic and overseas customers to increase their stockholdings of our products. Brexit did not take place and we believe that most of our customers' inventory holdings were then wound down again in the final quarter of the year. We anticipate that a similar cycle will repeat as we approach 31 October 2019.

The other significant event relating to Brexit was to move the location of our Notified Body from BSI's office in the United Kingdom to BSI in Amsterdam. We believe this will ensure our ability to CE mark our disinfectants and sell them within Europe irrespective of the outcome of the Brexit negotiation.

Notwithstanding this near-term uncertainty relating to our trading relationship with Europe and the rest of the world, the outlook for the Company remains very positive.

How We Service Our Market

Over 95% of our revenues are of repeat consumable products that perform a vital function in hospitals. Their use is for the most part non-discretionary. Our products are typically small packaged goods, requiring no after sales service, other than comprehensive training. Capital sales, service and maintenance do not feature, therefore, in a significant way in our revenue model.

We sell our products directly to end-users in those markets in which we have established a direct operational presence, and through distributors in markets where we have no presence.

Our revenues - by sales channel

 
GBP000's                                          Unaudited  2017-18  Year on year  Percentage 
                                                    2018-19                 change      change 
 
Human Healthcare    Direct sales            UK       10,024    8,912         1,112         12% 
  EU                                                  6,650    4,087         2,563         63% 
  ROW                                                 4,273    3,961           312          8% 
 Sales to distributors   EU                           1,534    1,559          (25)        (2)% 
  ROW                                                 1,465    1,350           115          9% 
Contamination 
 Control            Direct sales            UK        1,205    1,258          (53)          4% 
  EU                                                     37       34             3          9% 
  ROW                                                    51       44             7         16% 
 Sales to distributors   EU                             122       96            26         27% 
                                            ROW           -        -             -           - 
Animal Healthcare   Direct sales            UK           79       96          (17)       (18)% 
  EU                                                      8        3             5        167% 
  ROW                                                   212      195            17          9% 
 Sales to distributors   UK                             488      569          (81)       (14)% 
  EU                                                     21       56          (35)       (63)% 
 Group sales                                         26,169   22,220         3,949         18% 
 

Our revenues - by technology

The majority of our sales are of chlorine dioxide (CI02) based products; but we do formulate, manufacture and sell products utilising other disinfectant chemistries. These include quaternary ammonium compounds, peracetic acid and alcohol. In 2019, GBP3.7m of our sales were of non-chlorine dioxide chemistries representing 14% of the total (2018: GBP3.8m representing 17%). As our chlorine dioxide product sales increase at a faster pace than non-chlorine dioxide product sales, and as we continue to find ways to persuade customers to switch to chlorine dioxide as a superior disinfection technology, we expect this percentage to continue to reduce in significance.

 
GBP000's                                               Unaudited  2017-18  Year on year  Percentage 
                                                         2018-19                 change      change 
 
Human Healthcare       Direct sales            CI02       20,009   16,167         3,842         24% 
  Other                                                      938      793           145         18% 
    Sales to distributors   CI02                           2,089    1,995            94          5% 
  Other                                                      910      914           (4)        (1)% 
Contamination 
 Control               Direct sales            CI02          234      148            86         58% 
  Other                                                    1,059    1,188         (129)       (11)% 
    Sales to distributors   CI02                              74       56            18         32% 
    Other                   Other                             48       40             8         20% 
Animal Healthcare      Direct sales            CI02           15       30          (15)       (50)% 
  Other                                                      284      264            20          8% 
    Sales to distributors   CI02                               2        5           (3)       (60)% 
  Other                                                      507      620         (113)       (18)% 
    Group sales                                           26,169   22,220         3,949         18% 
 

Our revenues - by portfolio and geographical split

Revenues increased by 18% in the year. UK sales grew by 9% and overseas sales by 26%. Overseas sales are made via two channels: through the Company's wholly-owned subsidiaries in Germany, Poland, Switzerland, Russia, Hong Kong, China, Australia, New Zealand, Belgium, France, The Netherlands and via third party distributors. Overseas subsidiary sales to end users increased by 35% to GBP11.233m in the year, whilst overseas sales to distributors increased by 3% to GBP3.14m (excluding GBP0.488m UK distributor sales within the UK).

Our Strategic Assets

We consider the assets that enable the Company to achieve its strategic goals to be:

-- Our chlorine dioxide chemistry, about which there are three critically important elements:

1. The formulation is proprietary;

2. We remain the only company using chlorine dioxide for the decontamination of medical instruments in the world, which gives us a genuine point of difference from all other infection prevention companies;

3. The length of time that we have enjoyed this position has allowed us to collate a significant body of knowledge, including published scientific data, the testimony of almost two decades of safe use, a significant global footprint of regulatory approvals and a library of proven compatibility with hundreds of medical instruments, all of which would take a newcomer significant time and cost to match.

-- Intellectual property protection - at 30 June 2019, we held 277 patents granted in 36 countries providing legal protection for our products;

-- Our people - who hold an unrivalled body of knowledge relating both to infection prevention and to chlorine dioxide, allowing us to quickly and efficiently create and bring to market innovative and market ready products.

Our proprietary chlorine dioxide chemistry

The competitive advantage that we hold is that we are the only company worldwide using chlorine dioxide to disinfect medical instruments.

With this same chemistry, we have also established a bridgehead in hospital surface disinfection, the veterinary market, and the contamination control market.

The focus of our research and development is our chlorine dioxide technology, searching for continuous improvements in increased microbial efficacy, a reduction in hazards, and greater efficiency in manufacture. In parallel, we invest heavily in the creation of packaging and delivery forms that enhance and simplify the user experience.

Our regulatory programme succeeded in attaining 67 approvals for 34 products in 14 countries during the year.

Our intellectual property protection

In its broadest sense, our intellectual property relates to:

1. Patents, trademarks and registered designs;

2. The scientific validation of our chemistry and our products that has entered the public domain via 29 peer-reviewed and published papers;

3. 19 guidelines have been published by professional clinical bodies, infection prevention bodies, and national healthcare institutions that reference the use of chlorine dioxide in a format that is recognisable as Tristel;

4. The certification by medical device manufacturers that our chemistry is compatible with their products. We enjoy official compatibility with the instrumentation of 55 medical device manufacturers, with respect to 1,845 of their individual models.

Our people

At Tristel the basic qualities we seek in our staff are integrity, inquisitiveness and humility. In our management team, we also look for excellent decision making and execution ability and a "know no boundaries" approach. We believe that these qualities can make the highest possible performance achievable. We view our colleagues as a key strategic asset of the business.

Delivering on our key strategic financial goal

Our key strategic financial goal is to deliver long term sustainable growth. The two key performance measures that we target are:

-- Consistent revenue growth - during the past five years, revenue has grown from GBP15.3m to GBP26.2m - an increase of 71%. The compound annual growth rate in revenue since the Group went public in 2005 has been 16%. Our target over the past three years has been to grow revenues in the range of 10% to 15% on average each year to 30 June 2019, which has been achieved.

-- Maintaining the profitability of the Group - during the year the Group achieved a (before share-based payments) pre-tax margin of 21%. The benchmark (before share-based payments) pre-tax margin we set for the plan period was 17.5%. This measure has also been achieved.

The corollary to achieving these targets is that we have been highly cash generative given the operational cash requirements of the business. The Board's policy with respect to dividends is that if it considers that there are no earnings enhancing opportunities to invest excess cash, a special dividend for shareholders will be considered along with other distribution options.

The Board's pursuit of these financial objectives is grounded in the belief that consistent and sustainable increases in earnings and dividends will, over time, result in share price growth.

Having successfully delivered upon the 2016 to 2019 plan, the Board has established a new financial plan taking the Company to 2022, which incorporates two key performance measures. They are:

-- Consistent revenue growth - to grow revenues in the range of 10% to 15% per annum, on average over the three years to 30 June 2022.

-- Maintaining the profitability of the Group - to continue to achieve an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of at least 25%, also stated before share based payment charges. We have changed the profitability measure from a pre-tax profit margin to an EBITDA margin, so that our profitability target does not deter investment in future revenue and profit generating possibilities, which will impact amortisation.

Progress in North America

In 2014, we explained to our shareholders that we had embarked upon a United States regulatory approvals programme. To date we have focussed upon our chlorine dioxide foam-based product Duo.

We have received approval for Duo from the EPA as an intermediate level disinfectant.

We are preparing a submission to the FDA for Duo as a high-level disinfectant. The intended use patterns will be for intra-cavity ultrasound probes, nasendoscopes, and lastly certain ophthalmic devices. If successful, this will position us in three of the clinical areas in which we are most successful in other geographical markets.

We have appointed Parker Laboratories as our contract manufacturer for supply to each of these targeted clinical areas. We have granted Parker marketing rights for Duo's use in ultrasound where they are the market leader in the United States for ultrasound conductive gels. In the ultrasound segment, the contractual arrangement is royalty-based.

Focus

We have set objectives which are visible to everyone inside the Group, and we make them equally visible to all other stakeholders.

We look forward to meeting these objectives and continuing the progress of the Group. We look to the future with confidence as Tristel continues to grow and expand its geographical reach.

Paul Swinney

Chief Executive Officer

15 October 2019

Tristel plc

Consolidated Income Statement

For the year ended 30 June 2019

 
                                                 Unaudited 
 
                                                      2019      2018 
                                                   GBP 000   GBP 000 
Revenue                                             26,169    22,220 
Cost of sales                                      (5,504)   (5,040) 
                                                 ---------  -------- 
Gross profit                                        20,665    17,180 
Share based payments                                 (852)     (665) 
Depreciation, amortisation and impairments         (1,537)   (1,564) 
Administrative expenses, excluding share 
 based payments, depreciation, amortisation 
 and impairment                                   (13,579)  (10,971) 
                                                 ---------  -------- 
Operating profit                                     4,697     3,980 
                                                 ---------  -------- 
Finance income                                           5         2 
Finance costs                                          (1)         - 
                                                 ---------  -------- 
Net finance income                                       4         2 
Share of profit of equity accounted investees           45        24 
                                                 ---------  -------- 
Profit before tax                                    4,746     4,006 
Income tax expense                                   (715)     (734) 
                                                 ---------  -------- 
Profit for the year                                  4,031     3,272 
                                                 =========  ======== 
Profit/(loss) attributable to: 
Owners of the company                                4,031     3,272 
                                                 =========  ======== 
 
 
Earnings per share from total and continuing 
 operations attributable to equity holders 
 of the parent 
                                                2019  2018 
Basic - pence                                   9.14  7.62 
Diluted - pence                                 8.86  7.33 
 

The above results were derived from continuing operations.

Earnings before interest, tax, depreciation and amortisation for the year ended 30 June 2019 were GBP6,279,000 (2018 GBP5,568,000). (Note 4.)

Tristel plc

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2019

 
                                              Unaudited 
 
                                                   2019      2018 
                                                GBP 000   GBP 000 
Profit for the year                               4,031     3,272 
Items that may be reclassified subsequently 
 to profit or loss 
Foreign currency translation gains/(losses)         149     (112) 
                                              ---------  -------- 
Total comprehensive income for the year           4,180     3,160 
                                              =========  ======== 
Total comprehensive income attributable to: 
Owners of the company                             4,180     3,160 
                                              =========  ======== 
 

Tristel plc

Consolidated Balance Sheet

As at 30 June 2019

 
                                                Unaudited 
 
                                                  30 June   30 June 
                                                     2019      2018 
                                                  GBP 000   GBP 000 
Assets 
Non-current assets 
Property, plant and equipment                       1,466     1,328 
Goodwill                                            4,146       998 
Intangible assets                                   8,803     5,954 
Investments                                           807       589 
Investments accounted for using the equity 
 method                                                65        46 
Deferred tax assets                                   709       399 
                                                ---------  -------- 
                                                   15,996     9,314 
                                                ---------  -------- 
Current assets 
Inventories                                         2,957     2,279 
Trade and other receivables                         5,370     4,286 
Cash and cash equivalents                           4,170     6,661 
                                                ---------  -------- 
                                                   12,497    13,226 
                                                ---------  -------- 
Total assets                                       28,493    22,540 
                                                =========  ======== 
Equity and liabilities 
Equity 
Share capital                                         446       432 
Share premium                                      11,427    11,058 
Foreign currency translation reserve                   83      (66) 
Merger reserve                                      2,205       478 
Retained earnings                                   9,191     6,518 
                                                ---------  -------- 
Equity attributable to owners of the company       23,352    18,420 
Non-controlling interests                               7         7 
                                                ---------  -------- 
Total equity                                       23,359    18,427 
                                                ---------  -------- 
Non-current liabilities 
Deferred tax liabilities                              756       205 
Current liabilities 
Trade and other payables                            3,539     3,201 
Income tax liability                                  839       707 
                                                ---------  -------- 
                                                    4,378     3,908 
                                                ---------  -------- 
Total liabilities                                   5,134     4,113 
                                                ---------  -------- 
Total equity and liabilities                       28,493    22,540 
                                                =========  ======== 
 

EA Dixon

Director

Tristel plc

Consolidated Statement of Changes in Equity (Unaudited)

For the year ended 30 June 2019

 
                                                    Foreign                                          Non- 
                            Share        Share     currency      Merger   Retained            controlling        Total 
                          capital      premium  translation     reserve   earnings     Total    interests       equity 
                          GBP 000      GBP 000      GBP 000     GBP 000    GBP 000   GBP 000      GBP 000      GBP 000 
At 1 July 2018                432       11,058         (66)         478      6,518    18,420            7       18,427 
Profit for the year             -            -            -           -      4,031     4,031            -        4,031 
Exchange difference 
 on translation 
 of foreign 
 operations                     -            -          149           -          -       149            -          149 
                      -----------  -----------  -----------  ----------  ---------  --------  -----------  ----------- 
Total comprehensive 
 income                         -            -          149           -      4,031     4,180            -        4,180 
Dividends                       -            -            -           -    (2,210)   (2,210)            -      (2,210) 
New share capital 
 subscribed                     7          369            -           -          -       376            -          376 
Share based payment 
 transactions                   -            -            -           -        852       852            -          852 
Acquisition of 
 subsidiaries, 
 increase/(decrease) 
 in equity                      7            -            -       1,727          -     1,734            -        1,734 
                      -----------  -----------  -----------  ----------  ---------  --------  -----------  ----------- 
At 30 June 2019               446       11,427           83       2,205      9,191    23,352            7       23,359 
                      ===========  ===========  ===========  ==========  =========  ========  ===========  =========== 
                                                    Foreign                                          Non- 
                            Share        Share     currency    Merger     Retained            controlling        Total 
                          capital      premium  translation   reserve     earnings     Total    interests       equity 
                          GBP 000      GBP 000      GBP 000   GBP 000      GBP 000   GBP 000      GBP 000      GBP 000 
At 1 July 2017                427       10,705           46         478      4,399    16,055            7       16,062 
Profit for the year             -            -            -           -      3,272     3,272            -        3,272 
Exchange difference 
 on translation 
 of foreign 
 operations                     -            -        (112)           -          -     (112)            -        (112) 
                      -----------  -----------  -----------  ----------  ---------  --------  -----------  ----------- 
Total comprehensive 
 income                         -            -        (112)           -      3,272     3,160            -        3,160 
Dividends                       -            -            -           -    (1,818)   (1,818)            -      (1,818) 
New share capital 
 subscribed                     5          353            -           -          -       358            -          358 
Share based payment 
 transactions                   -            -            -           -        665       665            -          665 
                      -----------  -----------  -----------  ----------  ---------  --------  -----------  ----------- 
At 30 June 2018               432       11,058         (66)         478      6,518    18,420            7       18,427 
                      ===========  ===========  ===========  ==========  =========  ========  ===========  =========== 
 

Tristel plc

Consolidated Statement of Cash Flows

For the year ended 30 June 2019

 
                                              Unaudited 
                                                   2019     2018 
                                                GBP'000  GBP'000 
Cash flows from operating activities 
Profit before tax                                 4,746    4,006 
Adjustments to cash flows from non-cash 
 items 
Depreciation of plant, property & 
 equipment                                          584      548 
Amortisation of intangible asset                    886      950 
Impairment of intangible asset                       67       67 
Share based payments - IFRS 2                       852      665 
Gain on fair value of investment                   (98)        - 
Loss/(profit) on disposal of property, 
 plant and equipment                                 21     (17) 
Unrealised profit/(loss) in foreign 
 exchange                                            72     (78) 
Loss/(profit) on disposal of intangible 
 asset                                               12        - 
Finance income                                      (5)      (2) 
                                              ---------  ------- 
                                                  7,137    6,139 
Working capital adjustments 
(Increase)/decrease in inventories                (415)       13 
Increase in trade and other receivables           (414)    (587) 
(Decrease)/increase in trade and other 
 payables                                            49       54 
Corporation tax paid                              (871)  (1,124) 
                                              ---------  ------- 
Net cash flow from operating activities           5,486    4,495 
                                              ---------  ------- 
Cash flows from investing activities 
Interest received                                     5        2 
Purchase of intangible assets                     (669)    (997) 
Purchase of investment in Ecomed                (4,706)        - 
Purchase of investment in MobileODT               (120)        - 
Purchase of property plant and equipment          (678)    (516) 
Proceeds from sale of property plant 
 and equipment                                        -       63 
                                              ---------  ------- 
Net cash used in investing activities           (6,168)  (1,448) 
                                              ---------  ------- 
Cash flows from financing activities 
Share issues                                        383      358 
Dividends paid                                  (2,210)  (1,818) 
                                              ---------  ------- 
Net cash used in financing activities           (1,827)  (1,460) 
                                              ---------  ------- 
Net (decrease)/increase in cash and 
 cash equivalents                               (2,509)    1,587 
Cash and cash equivalents at the beginning 
 of the period                                    6,661    5,088 
Exchange differences on cash and cash 
 equivalents                                         18     (14) 
                                              ---------  ------- 
Cash and cash equivalents at the end 
 of the period                                    4,170    6,661 
                                              =========  ======= 
 
 
1  Accounting policies 
 

Basis of accounting

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).

There have been no new financial reporting standards effective for the year which have impacted the accounting policies stated below. Tristel plc, the Group's ultimate parent company, is a limited liability company incorporated and domiciled in the United Kingdom.

Basis of consolidation

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2019. Subsidiaries are entities over which the Group has rights or is exposed to variable returns from its involvement with the investee and has the power to affect those returns by controlling the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.

Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Acquisitions of subsidiaries are dealt with by the acquisition method. The acquisition method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. These fair values are also used as the basis for subsequent measurement in accordance with the Group accounting policies. Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of the aggregate of the consideration transferred and the amount of non-controlling interest over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition.

Non-controlling interests, presented as part of equity, represent a proportion of a subsidiary's profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the assets of the parent and the non-controlling interests based on their respective ownership interests.

Audit exemption

The following subsidiaries are exempt from the requirements of the UK Companies Act 2006 relating to the audit of individual accounts by virtue of s479A of the Act :

-- Tristel International Limited - Registered number 07874262

-- Scorcher Idea Limited - Registered number 04602679

Changes in accounting policy

EU adopted IFRSs not yet applied

As of 30 June 2019, the following Standards and Interpretations are in issue but not yet effective and have not been adopted early by the Group:

-- IFRS 16 Leases (effective 1 January 2019)

-- IFRS 17 Insurance contracts (effective 1 January 2021)

The Directors anticipate that the adoption of IFRS 17 in future periods will have no material effect on the financial statements of the Group.

IFRS 16

IFRS 16 - Leases was issued in January 2016 and will be adopted by the Group effective 1 July 2019. The standard provides a single lease accounting model, requiring lessees to recognise assets and liabilities for all operating leases unless the term is 12 months or less or the leased asset is of a low value. As at the reporting date, the group has non-cancellable operating lease commitments of GBP4.8m. Of these commitments, the Group expects to recognise right of use assets of approximately GBP3.1m on 1 July 2019 and lease liabilities of GBP3.3m (after adjustments for prepayments and accrued lease payments recognised as at 30 June 2019). The modified retrospective transition approach will be applied with the right of use assets being measured as if IFRS 16 had always been applied using the transition discount rate, subsequently an adjustment to equity of GBP0.2m is expected as at 1 July 2019. Comparative results will not require restatement.

There are no other standards that are not yet effective and that would be expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.

None of the standards, interpretations and amendments effective for the first time from 1 July 2018 have had a material effect on the financial statements.

 
2  Publication non-statutory accounts 
 

The financial information set out above does not constitute the company's statutory accounts for the years ended 30 June 2019 or 2018. The financial information for 2018 is derived from the statutory accounts for 2018 which have been delivered to the registrar of companies. The auditor has reported on the 2018 accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for 2019 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of companies in due course.

The Board of Tristel plc approved the release of this unaudited Preliminary Announcement on 15 October 2019.

 
3  Segmental Analysis 
 

Management considers the Company'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 Company's operating segments are identified initially from the information which is reported to the chief operating decision maker.

The first segment concerns the manufacture and sale of infection control and hygiene products that includes the Company's chlorine dioxide chemistry, and are used primarily for infection control in hospitals. This segment generates approximately 92% of Company revenues (2018: 90%).

The second segment which constitutes 3% (2018: 4%) of the business activity, relates to the manufacture and sale of disinfection and cleaning products, principally into veterinary and animal welfare sectors ("Animal healthcare"). During prior years all sales for this segment were made to a distributor who supplied the end user.

The third segment addresses the pharmaceutical and personal care product manufacturing industries ("Contamination control"), and has generated 5% (2018: 6%) of the Company's revenues this year.

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

The Company's centrally incurred administrative expenses and operating income, and assets and liabilities, cannot be allocated to individual segments.

 
Un-audited                                               Contamination 
                    Human Healthcare  Animal Healthcare        Control  Total 2019 
                              GBP000             GBP000         GBP000      GBP000 
Revenue 
From external 
 customers                    23,946                808          1,415      26,169 
Cost of material               4,736                275            493       5,504 
 
Segment gross 
 profit                       19,210                533            922      20,665 
 
Gross margin                     80%                66%            65%         79% 
Centrally incurred income and expenses 
 not attributable to individual segments: 
Depreciation and amortisation of non-financial 
 assets                                                                      1,537 
Other administrative expenses                                               13,579 
Share-based payments                                                           852 
 
Segment operating profit                                                     4,697 
Segment operating profit can be reconciled 
 to Group profit before tax as follows: 
Finance income                                                                   4 
Results from equity accounted associate                                         45 
 
Total profit before tax                                                      4,746 
 
 
 
 
                                                         Contamination 
                    Human Healthcare  Animal Healthcare        Control  Total 2018 
                              GBP000             GBP000         GBP000      GBP000 
Revenue 
From external 
 customers                    19,869                919          1,432      22,220 
Cost of material               4,161                369            510       5,040 
 
Segment gross 
 profit                       15,708                550            922      17,180 
 
Gross margin                     79%                60%            64%         77% 
Centrally incurred income and expenses 
 not attributable to individual segments: 
Depreciation and amortisation of non-financial 
 assets                                                                      1,564 
Other administrative expenses                                               10,971 
Share based payments                                                           665 
 
Segment operating profit                                                     3,980 
Segment operating profit can be reconciled 
 to Group profit before tax as follows: 
Finance income                                                                   2 
Results from equity accounted associate                                         24 
 
Total profit before tax                                                      4,006 
 
 
 
 
 The Group's revenues from external customers are divided into 
  the following geographical areas: 
Unaudited                                                              Contamination 
                              Human Healthcare      Animal Healthcare        Control  Total 2019 
                                        GBP000                 GBP000         GBP000      GBP000 
United Kingdom                          10,024                    567          1,205      11,796 
Europe                                   8,184                     29            159       8,372 
Rest of World                            5,738                    212             51       6,001 
 
Total Revenues                          23,946                    808          1,415      26,169 
 
                                                                       Contamination 
                              Human Healthcare      Animal Healthcare        Control  Total 2018 
                                        GBP000                 GBP000         GBP000      GBP000 
United Kingdom                           8,912                    665          1,258      10,835 
Germany                                  3,989                      -             34       4,023 
Rest of World                            6,973                    254            135       7,362 
 
Total Revenues                          19,874                    919          1,427      22,220 
 
4                      Income tax 
Tax charged in the income statement                                        Unaudited 
                                                                                2019        2018 
                                                                             GBP'000     GBP'000 
Current taxation 
Overseas tax                                                                     798         850 
UK corporation tax                                                               221         255 
UK corporation tax adjustment to prior periods                                  (16)         (2) 
                                                                       -------------  ---------- 
                                                                               1,003       1,103 
Deferred tax 
Arising from origination and reversal of temporary 
 differences                                                                   (322)       (369) 
UK deferred tax adjustment to prior periods                                     (20)           - 
Tax rate effect                                                                   54           - 
                                                                       -------------  ---------- 
Tax expense in the income statement                                              715         734 
                                                                       =============  ========== 
 
 

The tax on profit before tax for the year is lower than the standard rate of corporation tax in the UK (2018 - lower than the standard rate of corporation tax in the UK) of 19% (2018 - 19%).

The differences are reconciled below:

 
                                                     Unaudited 
 
                                                          2019                2018 
                                                       GBP 000             GBP 000 
Profit before tax                                        4,746               4,006 
                                                     =========  ================== 
Corporation tax at standard rate                           902                 761 
Adjustment in respect of prior years                      (36)                 (2) 
Increase from effect of capital allowances 
 depreciation                                               10                   - 
Expenses not deductible for tax purposes                   166                  24 
Other temporary differences                              (175)                 131 
(Decrease) from effect of patent box                     (226)               (163) 
Tax rate differences                                       225                 115 
Enhanced relief on qualifying scientific research 
 expenditure                                             (151)               (132) 
                                                     ---------  ------------------ 
Total tax charge                                           715                 734 
                                                     =========  ================== 
5                                                   Dividends 
Amounts recognised as distributions to               Unaudited 
 equity holders in the year: 
                                                          2019     2018 
                                                        GBP000   GBP000 
Ordinary shares of 1p each 
Final dividend for the year ended 30 
 June 2018 of 2.98p (2017: 2.63p) per 
 share                                                   1,303    1,130 
Interim dividend for the year ended 30 
 June 2019 of 2.04p (2018: 1.60p) per 
 share                                                     907      688 
                                                     ---------  ------- 
                                                         2,210    1,818 
                                                     ---------  ------- 
Proposed final dividend for the year 
 ended 30 June 2019 of 3.50p (2018: 2.98p) 
 per share                                               1,560    1,287 
Company 
Dividend received from subsidiaries                    (2,793)  (1,465) 
                                                     =========  ======= 
 
 

The proposed final dividend is subject to approval by shareholders at the forthcoming Annual General Meeting and has not been included as a liability in the financial statements.

 
6                                            Earnings per share 
The calculations of earnings per share          Unaudited 
 are based on the following profits and 
 number of shares: 
                                                     2019     2018 
                                                   GBP000   GBP000 
Retained profit for the financial year 
 attributable to equity holders of the 
 parent                                             4,031    3,272 
                                              -----------  ------- 
                                                   Shares   Shares 
                                                     '000     '000 
                                                   Number   Number 
Weighted average number of ordinary shares 
 for the purpose of basic earnings per 
 share                                             44,086   42,956 
Share options                                       1,399    1,688 
                                              -----------  ------- 
                                                   45,485   44,644 
                                              -----------  ------- 
Earnings per ordinary share 
Basic                                               9.14p    7.62p 
Diluted                                             8.86p    7.33p 
 
 

A total of 320,000 options of ordinary shares were anti-dilutive at 30 June 2019 (430,000 at 30 June 2018). Contingent options would be dilutive but are excluded. The Group also presents an adjusted basic earnings per share figure which excludes the share-based payments charge:

 
                                         Unaudited 
                                              2019     2018 
                                           GBP'000  GBP'000 
Retained profit for the financial year 
 attributable to equity holders of the 
 parent                                      4,031    3,272 
                                         ---------  ------- 
Adjustments: 
Share based payments                           852      665 
                                         ---------  ------- 
Net adjustments                                852      665 
Adjusted earnings                            4,883    3,937 
                                         ---------  ------- 
Adjusted basic earnings per ordinary 
 share                                      11.08p    9.16p 
                                         ---------  ------- 
 
 
7  Share capital 
 

Allotted, called up and fully paid shares

 
                                 Unaudited 
 
                                  30 June             30 June 
                                    2019                2018 
                             No. 000     GBP 000  No. 000  GBP 000 
Ordinary of GBP0.01 each      44,563      445.63   43,192   431.92 
 
                                          Number  GBP'000 
30 June 2018                          43,192,133      432 
Issued during the year                   661,415        7 
Issued on acquisition                    709,775        7 
                                      ----------  ------- 
30 June 2019                          44,563,323      446 
                                      ==========  ======= 
 
 

661,415 ordinary shares of 1 pence each, related to the exercise of 661,415 share options issued during the year (2018: 442,716) in addition to 709,775 ordinary shares of 1 pence each issued on acquisition (2018: nil). The weighted average exercise price was 81.84 pence (2018: 80.80p).

 
8  Annual report 
 

Printed copies of the annual report and financial statements, along with the notice of AGM, will be sent to shareholders prior to the Company's Annual General Meeting taking place on 17 December 2019 in Snailwell, Newmarket.

 
9     Post balance sheet event 
 
  The Company acquired 80% of the share capital of Tristel Italia srl (TI) from 
  Michael Donaldson for GBP595,000 in July 2019. Tristel previously owned 20% 
  of TI since 2007 when it supported Donaldson to introduce Tristel's medical 
  device disinfectants into Italy. 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR LFFEIISLELIA

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October 16, 2019 02:00 ET (06:00 GMT)

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