Final Results

RNS Number : 6966P

Tristel PLC

29 October 2012

 



TRISTEL plc

("Tristel" or "the Company")

Preliminary Audited Results for the year ended 30 June 2012

Tristel plc (AIM: TSTL), the manufacturer of infection prevention and contamination control consumable products, announces audited preliminary results for the year ended 30 June 2012 ahead of adjusted market expectations. 

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

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

Financial Highlights

·     Turnover up 18% to £10.94m (2011: £9.29m)

·     Gross margin improved to 68% (2011: 64%)

·     Adjusted* pre-tax profit up 48% to £0.75m (2011: £0.51m)

·     Basic earnings per share up 39% to 1.77p (2011: 1.27p)

·     Dividend per share for the full year up 12% to 0.62p (2011: 0.555p)

·     International sales up 130% to £2.1m (2011: £1m)

·     Gross cash of £0.71m (2011: £0.44m)

Operational Highlights

·     26% increase in Human Healthcare turnover driven by strong instrument and surfaces product sales

·     Anistel brand launched in the final quarter - direct sales to the veterinary market at enhanced margins

·     Crystel sales increased five-fold

·     Expansion of manufacturing facility completed in year

·     Board Changes:  Christopher Samler appointed Chairman

Paul Swinney, Chief Executive of Tristel plc, said:

"The year was one of transition in which we completed the investment in our manufacturing capability which commenced in 2010.  We now have three well branded product ranges, directly addressing three distinct markets.  We look forward to turnover growth and the restoration of profitability to levels achieved prior to our expansion programme."

*Adjusted for non-recurring items totalling £0.17m

For further information:

Tristel plc		Tel: [phone]
Paul Swinney, Chief Executive Liz Dixon, Finance Director
Walbrook PR Ltd		Tel: [phone]
Paul McManus		Mob: [phone] or [e-mail]
Lianne Cawthorne		Mob: [phone] or [e-mail]
FinnCap
Geoff  Nash / Charlotte Stranner (Corporate Finance)		Tel: [phone]
Simon Starr (Corporate Broking)

Chairman's Statement

Introduction

2012 has in many regards been a year of transition and change for Tristel plc. After 19 years, our founding shareholder Francisco Soler, has stepped down as Chairman. His deep knowledge and understanding of the business is without parallel and I am delighted to report that he will continue to be involved with the business as a Non-Executive Director. His guiding hand as we effect the transition of the business is extremely welcome and we all thank Francisco for this.

The financial results for 2012 indicate modest but welcome growth in both revenue (17.8%), and profit before tax (13.8%).  Whilst these results are in line with our revised guidance, they are far from where a company of our ambition should be. Our Board recognises this and is determined that we return to the growth pattern and expectation that we have seen in the years prior to 2010. To affect this we have initiated a root and branch review of our business across the world as well as of our Board composition.

The past two years have been characterised by investments in new products, processes and geographies. Our returns from these investments have been at best patchy, and the Board and Management are single-mindedly focused on ensuring that these investments either become profitable or are restructured. With the investments complete we intend to ensure that the business grows at both the revenue and profit line in the segments we occupy, and that the subsequent returns meet our internal hurdles. Success here will drive our value and in time reward our patient shareholders. Our Board needs to be fashioned to drive this transition.

We continue to develop our presence in the following segments of our markets:

Hospital infection prevention in the human health market (the Human Healthcare market).

We manufacture and sell a variety of high performance disinfectants under the Tristel brand name utilising our proprietary chlorine dioxide chemistry. These products are sold to a variety of end users in the hospital and growth in this segment continues to be strong at 26%.  This is attributable to the newer products in the range such as the Tristel Wipes System, which has grown by more than 70% over the past 12 months; and the surfaces product range which is also finding increased acceptance and where growth was over 21%. Consequently, we will focus our sales efforts on these high growth areas in the current and future years.

Veterinary practice infection prevention (the Animal Healthcare market). 

We produce and sell a range of products, which in prior years we manufactured for distribution by Medichem International (Marketing) Ltd, under a new brand name, Anistel. Our relationship with Medichem has now terminated. This unforeseen change has provided Tristel with the opportunity to access this relatively static market directly to attain what we anticipate will be an enhanced margin.  Early indications of our market penetration are encouraging.

Control of contamination in critical environments (the Contamination Control market). 

The third product set, brand named Crystel, is a range of high performance disinfectants and detergents designed to control contamination in laboratories, manufacturing plants and hospital pharmacies. This range of products, which is dependent on our own specialist manufacturing facility, is new to Tristel and sales have not taken off as quickly as anticipated. The operation on a standalone basis is not yet sufficiently profitable and a major focus will be on improving this as quickly as possible. 

Over the last two years we have invested significantly in overseas operations (New Zealand, China, Hong Kong and Germany), where there is the potential to replicate the success seen in the UK human healthcare market. In these territories we have focused upon creating direct operations rather than using agents or distributors and have achieved rapid growth, with aggregate turnover increasing by over 400% to £1.07 million in the year (2011: £0.26 million). We have also made significant gains in the registration process of our faster growth products, which we believe bodes well for the immediate future.

                However, not all of these operations are cash flow positive, a situation that the Board considers to be unsustainable. Immediate steps have been taken to reduce our cost base, and in the event that we cannot retrieve the situation, further hard decisions will have to be taken. 

EPS and dividend

Basic earnings per share were 1.77 pence (2011: 1.27 pence) which represents an increase of 39.4%. The Board is recommending that the final dividend is 0.35 pence (2011: 0.12 pence) making the total dividend for the year 0.62 pence (2011: 0.555 pence). If approved, the final dividend will be paid on 14 December 2012 to shareholders on the register at 16 November 2012.

Employees

The Board is always mindful that our employees are our single most important asset. We also recognise that it has been a particularly challenging year for everyone at Tristel. As such we would like to recognise formally your contributions during the year and to acknowledge that without your considerable efforts we would be in a less stable position. Thank you.

Outlook

As previously indicated, we are in the middle of a period of transition. We have conducted a review of our entire operation and have devised from the bottom up a very clear set of objectives and business plans.  The transition to a more structured company and a return to more profitable growth will not be easy.  However, we feel strongly that the market opportunity is there; and having completed the investment in plant and set up, having been joined by some new faces to help us move to the next level and having renewed our focus, we can achieve this for our shareholders.  We look forward to further growth in 2013 and beyond.

Christopher Samler

Chairman

26 October 2012 

Chief Executive's Report

Tristel is a global supplier of infection prevention, contamination control and specialist hygiene products. 

The Group serves three markets with three distinctly branded product portfolios:

·      Tristel - products used for infection prevention in hospitals (human healthcare);

·      Anistel - products used for infection prevention and hygiene in veterinary practices and animal welfare establishments (animal healthcare);

·      Crystel - products used for contamination control in critical environments, for example the clean rooms of pharmaceutical manufacturing companies and the aseptic units in hospitals. 

Infection prevention in human healthcare - the Tristel portfolio

Hospital microbiologists and infection prevention officers devise their infection prevention and control strategies in terms of the vectors (or routes) of transmission of infection within a hospital.  These vectors are instruments, surfaces, water, skin and air. 

Tristel products are used for the disinfection of specialist instruments, of hospital surfaces, and of water supplies.  Whilst the Group has developed a number of patented, chlorine dioxide based hand disinfectants it has not yet sought to commercialise them.

Instruments

There are many types of medical instrument that cannot tolerate sterilisation by heat (autoclaving) and which, as a consequence, have to be disinfected with a liquid chemical disinfectant.  The best known of these instruments are flexible endoscopes. 

Endoscopes are used in many clinical areas of a hospital.  For our product development and marketing strategy we have segregated them into the large, complex, multi-channelled endoscopes that are used in departments such as gastro-intestinal (GI) endoscopy; and the smaller and less complex instruments that are used in other departments of the hospital such as Ear, Nose and Throat (ENT), Cardiology, Urology and Ultrasound.  We categorise the larger, complex instruments under the banner MCE (multi-channelled endoscopes), and the smaller, less complex instruments under the banner N&SLI (non and single lumened instruments). 

For many years the principal focus of our competitors has been on the MCE category, and this is in fact where Tristel's origins lie.  However, since becoming a public company in 2005, we have concentrated on developing products and decontamination processes that focus on the N&SLI category and the hospital departments in which they are used.  These are the least competitively contested areas of instrument disinfection.

The products that we have developed to disinfect the N&SLI instruments are the Tristel Wipes System, the Stella decontamination tray together with Fuse high-level disinfectant, and various chlorine dioxide foam applications. 

One of our most successful innovations has been the Tristel Wipes System.  By incorporating the three steps of the decontamination process - cleaning the instrument; disinfecting it with chlorine dioxide; and then rinsing it before next use - into three individual wipes (each with their own unique formulation to undertake the task), and combining the steps with an audit trail process, the Tristel Wipes System has become the most widely used disinfection method in ENT, Cardiology, IVF and Ultrasound departments in the United Kingdom.  The system is portable, allows the instrument to be returned to the consultant for the next patient in a number of minutes, and requires no capital investment or maintenance.  It is a manual process, but one that meets the requirements of the infection control team for a systematic, properly documented process supported by comprehensive training.  Both the chlorine dioxide wipe and the Wipes System process are extensively patented.

The Tristel Wipes System is now sold in the United Kingdom and Republic of Ireland, throughout much of Continental Europe and Scandinavia, in Russia, Turkey, the UAE, South Africa, Malaysia, Hong Kong, China, Australia and New Zealand.

Whereas the Wipes System is a manual decontamination process, Stella is a more conventional immersion technique in which the instrument is soaked in Tristel Fuse liquid disinfectant for five minutes, the time required to kill all organisms.  Stella is able to flush automatically the lumen of an instrument, thereby enabling it to decontaminate the single-lumened instruments widely used in urology (cystoscopes), gynaecology (hysteroscopes) and respiratory medicine (bronchoscopes).

One of the key features of Stella is that it is battery powered and does not require mains power supply or water and has no need for service or maintenance.  Stella has, as a consequence, enormous potential in lesser resourced healthcare markets.  We believe that Stella can make a considerable difference to hygiene standards in the developing world. As an example a Stella unit was donated to the charitable organisation Mercy Ships, who operate hospital ships serving some of the poorest countries in the world. Aboard these ships people are able to receive free surgical operations, dental treatments and medical care. The provision of this unit has enabled Mercy Ships to now perform a higher number of critical surgeries than ever previously possible.

Stella units have been sold in the United Kingdom and Republic of Ireland, Benelux, UAE, Romania, Israel, Germany, Italy, New Zealand, Russia, Spain, China and Hong Kong.

The Wipes System, Stella and Fuse all challenge the orthodox conventions of endoscope decontamination, but they are gaining ever increasing acceptance worldwide.  Tristel's strategic objective is to establish these products as the universal "gold" standards for the decontamination of non and single-lumened heat sensitive medical instruments worldwide. 

Not only is the Wipes System CE marked as a medical device and approved by Australia's regulatory body (TGA) and China's Ministry of Health, it is also recognised by many national professional societies in their published guidelines as a widely used, even preferred, method for the decontamination of nasendoscopes (ENT), TOE probes (Cardiology) and ultrasound probes (womens health).

Instruments - financial performance and future outlook

The respective sales contributions of our MCE and N&SLI products are shown in the following table:

	2010-11	2011-12
Multi-Channelled Endoscopy UK	2,908,000	2,977,000
Non & Single Lumened UK	1,935,000	2,812,000
Non & Single Lumened Overseas	617,000	1,563,000
	5,460,000	7,352,000

Sales in 2011-12 of MCE products were £2,977,000, an increase of 2.4% on the previous year (2011: £2,908,000).  All sales were in the United Kingdom.

Total sales of N&SLI products increased from £2,552,000 to £4,375,000, a rise of 71.4%, with domestic sales increasing by 45.3% and overseas sales increasing by 153.5%.  Whilst we have achieved very high rates of penetration in the United Kingdom in certain niche areas such as ENT, our hospital clients are continuously finding new applications for the Wipes System.  There is very significant growth potential in areas such as women's health and ophthalmology.

In overseas markets, whether we have established a direct presence as we have in Germany and Russia, or a distributor represents our N&SLI products, we are far from reaching any level of market saturation.

We expect our N&SLI business to continue to grow strongly.  The contribution of overseas sales will increase as more countries approve the Wipes System and Stella and they increasingly become the orthodox decontamination methods for non and single-lumened heat-sensitive medical devices.

Surfaces

A key characteristic of Tristel's chlorine dioxide chemistry is that it is rapidly effective against bacterial spores.  Speed of kill is critical when it comes to disinfecting a surface, as once wetted the surface will dry naturally.  If the disinfectant requires a longer contact time to kill a spore than the drying time will allow, the disinfectant will not complete the task.  All of our surfaces products kill spores, and most importantly Clostridium difficile spores, in less than five minutes which is quick enough for a surface to remain wet in almost all conditions.

We have a number of packaging formats in our surfaces range - liquids in one and five litre packs, together with gels, foams and wipes.  They are used, often in combination, by both hospital nursing staff and housekeeping teams to clean and disinfect hospital surfaces such as ward floors, operating theatre walls, bed mattresses, commodes and patient trolleys.  Chlorine is the most prevalent incumbent chemistry which we replace when our surfaces range is adopted by a hospital. 

Surfaces - financial performance and outlook

Our surfaces product range is increasing its penetration into the United Kingdom hospital market and sales overseas are continuing to gain momentum.  Total sales of surface products increased from £867,000 to £1,055,000, a rise of 21.7%, with domestic sales increasing by 16.9% and overseas sales increasing by 69%. The progress made over the course of the past three years is demonstrated in the following table:

	2009-10	2010-11	2011-12
Surfaces UK	470,000	787,000	920,000
Surfaces Overseas	63,000	80,000	135,000
	533,000	867,000	1,055,000

Water

Tristel is the exclusive European distributor for the products of Bio-Cide International Inc, Oklahoma, United States.  These products incorporate a chlorine dioxide chemistry that is different from our proprietary formulation.  The Bio-Cide's composition is used to control Legionella, a bacterium found in drinking water and cooling towers.  Legionella is the cause of Legionnaires' disease.

The supply agreement with Bio-Cide was last renewed in June 2008 and has a 20-year term.  In association with the supply agreement, Tristel is the representative of Bio-Cide in the industry group that is sponsoring the registration of sodium chlorite and chlorine dioxide under the Biocidal Products Directive (BPD).  Tristel and Bio-Cide share the costs and benefits of membership of this industry group.

The active ingredients used in general purpose disinfectants, such as those used for surfaces, water and skin have to be registered under the BPD.  This Directive has been introduced by the European Community (EC) to limit the number of active ingredients that can be used, primarily for ecological and environmental reasons.  Sodium chlorite has been approved by the EC and our industry group is supporting it through the regulatory submission process.  The industry's consensus view is that the cost of submission under the BPD will block the development and introduction of active ingredients that could be future alternatives to those already approved under the BPD.  As a supplier of chlorine dioxide products, our long term view is that the regulatory environment is favourable to the disinfection products that we market, and that our involvement in water disinfection has bought an important corollary benefit in that we are in shaping the future regulatory environment for our technology.

Water - financial performance and outlook

Tristel's Water disinfection product range, whilst not a growth opportunity, produces a consistent stream of revenue, profit and cash.  It is a low investment area of the Group's business.

Total sales of Water disinfection products were £482,000 (2011: £611,000).  Export sales were £185,000 (2011: £235,000) and domestic sales £297,000 (2011: £376,000).

Other   

Other hospital infection prevention revenues during the year were £149,000 (2011: £225,000).

Infection prevention in animal healthcare - the Anistel portfolio

During the first nine months of the year, the Group manufactured and supplied to Medichem International (Marketing) Limiteda range of disinfectants and cleaning products.  Medichem sold these products to veterinary practices and other animal welfare institutions in the United Kingdom and overseas and to hospitals and laboratories in the United Kingdom and overseas.  A significant proportion of Medichem's sales were routed through wholesalers and other intermediaries.

In March a commercial dispute arose with Medichem.  As a consequence of the dispute, which could not be resolved by negotiation, Tristel elected to supply the end-user customer base directly.  In so doing, Tristel has created a new brand name for the animal healthcare suite of products - Anistel.  We have also established a specialist veterinary sales force.

In terminating the supply relationship and in establishing a new branding system Tristel incurred legal and stock write off costs totalling £55,000 (2011: £nil) which have been treated as and included in the non-recurring item.

Tristel ceased supply of products to Medichem on 27 March 2012 and since then the Group has been establishing a growing client base in the United Kingdom amongst veterinary practices, boarding institutions and the animal welfare charities, supplying its customers both directly and via the veterinary wholesalers. The Group has also supplied 16 overseas distributors in Italy, Egypt, New Zealand, Hong Kong, Malta, Lithuania, Ireland, Poland, Turkey, South Africa, Finland, Malaysia, Israel, Korea, Pakistan & Austria. 

The master brand name is Anistel and the key products in the animal healthcare range are:-

·      Anistel hard surface disinfectants and odour eliminators

·      Medistel instrument disinfectant

·      Enzystel instrument cleaning solution

·      Dermastel skin disinfectants

Infection prevention in animal healthcare - financial performance and future outlook

The sales contributions from the two quite distinct business models employed during the year were:-

Sales to Medichem in the period from 1 July 2011 to 27 March 2012 were £1,394,000 (2011: £2,086,000).  Sales made directly to intermediaries and end users in the final quarter of the year totalled £272,000 (2011: nil).The total sales of £1,666,000 in the year represents a 20% decrease on sales to Medichem  (2011: £2,086,000).

We believe that the Group is well positioned to capture the leading market position that the products it manufactured for Medichem enjoyed.  In selling to the end-user directly Tristel expects to increase its sales into the United Kingdom veterinary market and that they will be at an enhanced margin.  

Critical environment contamination control - the Crystel portfolio

The detergents and disinfectants in the Crystel portfolio are categorised as "non-sterile" and "sterile" in terms of our manufacture of them.  The sterile products have to be made in the clean room that we constructed in our Newmarket facility.

Our sterile products are used in the clean rooms of pharmaceutical manufacturers and the aseptic units of hospitals to prevent the microbial contamination of the critical environments in which drugs are produced.

The non-sterile products are typically used in the production facilities of manufacturers of personal care products to prevent cross-contamination between batch manufacturing processes.

In the United Kingdom the Crystel portfolio is sold directly to the end-user by a dedicated sales team and also through distributors and wholesalers.  In overseas markets we supply the Crystel portfolio via specialist pharmaceutical wholesalers.

Critical environment contamination control -financial performance and outlook

Sales of the sterile and non-sterile products during the year were £235,000 (2011: £38,000), an increase of 518.4%.

We expect a very significant increase in sales during the current financial year.

International - all Group portfolios

The Group has a clear strategy to expand its business internationally across all three of the Group's product portfolios.   

The business model employed in the majority of countries in which we sell products is to use a national distribution partner.  During the year, 38 distributors purchased Group products (2011: 18) with an aggregate value of £1,048,000   (2011: £726,000), an increase of 44.4% on the prior year.

Notwithstanding the model employed in the majority of countries, we have found that greater and more rapid penetration is in fact achieved where we have established subsidiaries and branch offices in overseas markets.  During the year, our direct operations in New Zealand, China, Hong Kong and Germany generated aggregate revenues of £1,068,000 (2011: £255,000).

The division between overseas sales generated by direct operations and by distributors in the year and compared to 2011 was:

	2010-11	2011-12
Overseas distributor sales	726,000	1,048,000
Overseas owned entity sales	255,000	1,068,000
	981,000	2,116,000

Wholly owned or partially owned overseas operations

Tristel New Zealand Limited, New Zealand (100% owned)

Tristel NZ is based in Tauranga, North Island.  Its team supervises product development, manufacture and all aspects of the supply chain process for the Stella decontamination system.  The team also serves the New Zealand and Australia hospital infection control markets.  In Australia, the Wipes System has been approved by the TGA.

Tristel NZ sales in the year were £335,000 (2011: £88,000), an increase of 280.7% on the prior year.          

Shanghai Stella Medical Equipment Co. Limited, China (85% owned)

Tristel Asia Limited, Hong Kong (85% owned)

SSME is based in Shanghai and its team is managing the regulatory process within China, Hong Kong and Taiwan for the three Tristel hospital infection prevention products - the Wipes System; Stella and Fuse, and the Surfaces range.  We have received multiple approvals from the regulatory bodies in China and Hong Kong for these products.

SSME and TA sales in the year were £521,000 (2011: £123,000), an increase of 323.6% on the prior year.

Tristel Italia srl, Italy (20% owned)

TIL is a sales and marketing operation serving the Italian hospital infection prevention market.

TIL's results are not consolidated into the Group but are accounted for under the equity method, and are unaudited, sales during the year were £136,810 (2011: £150,185), a decrease of 8.9 % on the prior year.

Tristel Germany (branch)

TG is a branch located in Berlin.  The team is a sales and marketing operation serving the German hospital infection prevention control market.  Sales during the year were £212,000 (2011: £44,000), a 381.8% increase on the prior year.

Tristel Russia (branch in formation)

TR is a branch located in Moscow.  Whilst at 30 June 2012 the branch was still in the process of formation, during the year the management team was actively promoting the interests of the Group and submitting tenders for fulfilment in 2012-13.

International - financial performance and future outlook

The Group's product portfolios have the opportunity to be global both in reach and scale. 

There will be opportunities in the future to use the overseas distributors that we have established for our hospital infection prevention business to sell the other two portfolios.  This opportunity will be for both our distribution partners and our owned operations.

As a result of our product offering becoming more established overseas, alongside the widening of our target markets, Group export sales increased by 110.7% during the year from £1,004,000 to £2,116,000 and international expansion will continue to be a major driving force for the growth of the Group.

GROUP RESULTS AND FINANCE

Revenue

Group revenue increased by 17.8% to £10,939,000 (2011:  £9,287,000)

Margins and operating profit

The gross margin increased to 67.9% from 63.5% in 2011 following a full year impact of the improved royalty arrangement negotiated during the prior year.

Excluding amortisation of intangibles, share-based payments, non-recurring items, interest and results from associates operating profits increased by 57.4% to £1,294,000 (2011: £822,000). 

Profit before tax

Profit before tax increased by 13.8% to £578,000 (2011: £508,000) after a non-recurring item of £174,000 (2011: £nil).  Profit before tax adjusted for the non-recurring item increased by 48% to £752,000 (2011: £508,000)

Earnings

The basic earnings per share were 1.77 pence (2011: 1.27 pence), an increase of 39.4%. 

Capital and intangible expenditures

The significant capital investment made in our manufacturing facility was drawn to a close this year with additions to plant and equipment for the year totalling £539,000 (2011: £880,000).  We have continued to invest in the development of new products, patents and regulatory approvals resulting in additions to intangible assets of £630,000 (2011: £1,533,000).

Treasury

Gross cash levels have increased during the year from £441,000 to £705,000 at 30 June 2012.

Paul Swinney

Chief Executive

26 October 2012

Tristel Plc Consolidated Income Statement For the year ended 30 June 2012
		Note	Year ended 30 June 2012		Year ended 30 June 2011
			£'000		£'000
Revenue			10,939		9,287
Cost of sales			(3,511)		(3,387)
Gross Profit			7,428		5,900
Other operating income			-		3
Administrative expenses: Share based payments			14		(29)
Depreciation, amortisation and impairment			(1,050)		(663)
Other Non-recurring items		4	(5,635) (174)		(4,689) -
Total administrative expenses			(6,845)		(5,381)
Operating profit			583		522
Finance income			7		12
Finance costs			(13)		(28)
Results from equity accounted associate			1		2
Profit before tax			578		508
Taxation		5	91		(71)
Profit for the year			669		437
Attributable to:
Non controlling interests			(38)		(39)
Equity holders of parent			707		476
			669		437
Earnings per share from total and continuing operations attributable to equity holders of the parent
Basic - pence		7	1.77		1.27
Diluted - pence		7	1.77		1.21

All amounts relate to continuing operations.          

Tristel Plc Consolidated Statement of Comprehensive Income For the year ended 30 June 2012

		Year ended 30 June 2012		Year ended 30 June 2011
		£'000		£'000
Profit for the period		669		437
Other comprehensive income
Exchange differences on translation of foreign operations		(5)		(73)
Total comprehensive income for the period		664		364
Attributable to:
Non controlling interests		(42)		(39)
Equity holders of the parent		706		403
		664		364

Tristel Plc Consolidated Statement of Changes in Equity For the year ended 30 June 2012
	Share	Share	Merger	Foreign	Retained earnings	Total attributable to owners of the parent	Non controlling interests	Total equity
	capital	premium	reserve	exchange
		account		reserve
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
30 June 2010	332	5,550	478	-	2,142	8,502	(8)	8,494
Transactions with owners:-
Dividends paid	-	-	-	-	(638)	(638)	-	(638)
Shares issued	68	3,601	-	-	-	3,669	-	3,669
Share based payments	-	-	-	-	29	29	-	29
Total transactions with  owners	68	3,601	-	-	(609)	3,060	-	3,060
Profit  for the year ended 30 June 2011	-	-	-	-	476	476	(39)	437
Other comprehensive income:- Exchange differences on translation of foreign operations                                    -		-	-	(73)	-	(73)	-	(73)
Total comprehensive income	-	-	-	(73)	476	403	(39)	364
30 June 2011	400	9,151	478	(73)	2,009	11,965	(47)	11,918
Transactions with owners:-
Dividends paid	-	-	-	-	(156)	(156)	-	(156)
Share based payments	-	-	-	-	(14)	(14)	-	(14)
	-	-	-	-	(170)	(170)	-	(170)
Profit  for the year ended 30 June 2012	-	-	-	-	707	707	(38)	669
Other comprehensive income:- Exchange differences on translation of foreign operations                                    -		-	-	(1)	-	(1)	(4)	(5)
Total comprehensive income	-	-	-	(1)	707	706	(42)	664
30 June 2012	400	9,151	478	(74)	2,546	12,501	(89)	12,412

Tristel Plc Consolidated Balance Sheet As at 30 June 2012
		Note		2012		2011
				£'000		£'000
Non-current assets
Goodwill				779		779
Intangible assets				6,898		6,843
Property, plant and equipment				1,505		1,496
Investments accounted for using the equity      Method				45		45
Deferred tax				-		11
				9,227		9,174
Current assets
Inventories				1,979		1,613
Trade and other receivables				2,831		2,685
Cash and cash equivalents				705		441
				5,515		4,739
Total assets				14,742		13,913
Capital and reserves
Share capital		8		400		400
Share premium account				9,151		9,151
Merger reserve				478		478
Foreign exchange reserve				(74)		(73)
Retained earnings				2,546		2,009
				12,501		11,965
Non controlling interests				(89)		(47)
				12,412		11,918
Current liabilities
Trade and other payables	18			1,916		1,879
Interest bearing loans and borrowings	19			82		49
Current tax				31		-
				2,029		1,928
Non-current liabilities
Interest bearing loans and borrowings Deferred tax	19			83 218		67 -
Total liabilities				2,330		1,995
Total equity and liabilities				14,742		13,913

Tristel Plc Consolidated Cash Flow Statement For the year ended 30 June 2012

				2012		2011
			Note	£'000		£'000
Cash flows from operating activities
Cash generated from operating activities			i	1,148		589
Corporation tax paid				351		(591)
				1,499		(2)
Cash flows used in investing activities
Interest received				7		12
Purchase of intangible assets				(630)		(1,533)
Acquisition of investments				-		(4)
Purchases of property, plant and equipment				(407)		(880)
Proceeds from sale of property, plant and equipment				38		20
Net cash used in investing activities				(992)		(2,385)
Cash flows from financing activities
Loans repaid				-		(1,140)
Interest paid				(83)		(28)
Share issues				(13)		3,900
Cost of share issues				-		(231)
Dividends paid				(156)		(638)
Net cash (used in) / from financing activities				(252)		1,863
Net increase / (decrease) in cash and cash equivalents				255		(524)
Cash and cash equivalents at the beginning of the period			ii	441		986
Exchange differences on cash and cash equivalents				9		(21)
Cash and cash equivalents at the end of the period			ii	705		441

Tristel Plc Notes to the Consolidated Cash Flow Statement For the year ended 30 June 2012
i.  RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS
			2012		2011
			£'000		£'000
Profit before tax			578		508
Adjustments for non cash items:
Depreciation of plant, property & equipment			499		392
Amortisation of intangible assets			551		271
Results from associates			(1)		(2)
Share based payments - IFRS2			(14)		29
(Profit) / loss on disposal of property, plant and equipment			(8)		(5)
Loss on disposal of intangible asset			24		-
Government grants			-		(3)
Finance costs			13		28
Finance income			(7)		(12)
			1,635		1,206
Increase in inventories			(366)		(225)
Increase in trade and other receivables			(146)		(641)
Increase / (decrease) in trade and other payables			25		249
Cash generated from operations			1,148		589

ii. CASH AND CASH EQUIVALENTS

The amounts disclosed on the cash flow statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts

			30 June 2012		30 June 2011
Year ended 30 June 2012			£'000		£'000
Cash and cash equivalents			705		441
			705		441

			30 June 2011		30 June 2010
Year ended 30 June 2011			£'000		£'000
Cash and cash equivalents			441		986
			441		986

Tristel Plc Notes to the Consolidated Financial Statements For the year ended 30 June 2012

1.                    NOTES

         Basis of accounting

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

Changes in accounting policies
The Group has adopted the following new interpretations, revisions and amendments to IFRS issued by the IASB, which are relevant to and effective for the Group's financial statements for the annual period beginning 1 July 2011:

Amendment to IAS 24 • Related party disclosures

Amendment to IFRS 7 • Transfers of financial assets
 
IAS 24 - Revised IAS 24: Related Party Disclosures (effective 1 January 2011)
The standard requires disclosures about transactions and outstanding balances with an entity's related parties. The standard defines various classes of entities and people as related parties and sets out the disclosures required in respect of those parties, including the compensation of key management personnel. No material impact was expected.                                 

IFRS 7 (Amendment) - Disclosures of Financial Assets (effective 1 January 2011)

The amendment requires an entity to disclose information related to the relationship between transferred financial assets that are not derecognised in their entirety and the associated liabilities. There is no effect on the company's financial statements.

Basis of consolidation

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2012. Subsidiaries are entities over which the Group has the power to control 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 purchase method. The purchase 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.  On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group accounting policies.  Goodwill is stated after separating out identifiable intangible assets.  Goodwill represents the excess of acquisition cost over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition.

EU adopted IFRSs not yet applied

As of 30 June 2012, the following Standards and Interpretations are in issue but not yet effective and have not been

adopted early by the Group:

·      IFRS 10 Consolidated Financial Statements (effective 1 January 2013)

·      IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013)

·      IFRS 13 Fair Value Measurement (effective 1 January 2013)

·      IAS 19 Employee Benefits (Revised June 2011) (effective 1 January 2013)

·      IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013)

·      IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2013)

·      Mandatory Effective Date and Transition Disclosures - Amendments to IFRS 9 and IFRS 7 (effective 1 January 2015)

·      IFRS 11 Joint arrangements (effective 1 January 2013)

·      IAS 12 Presentation of items of Other Comprehensive Income (effective 1 July 2012)

·      Annual Improvements 2009-2011 (effective 1 January 2013)

Tristel Plc Notes to the Consolidated Financial Statements - continued For the year ended 30 June 2012

1.                  NOTES - continued

The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material effect on the financial statements of the Group.

2.                   PUBLICATION OF NON-STATUTORY ACCOUNTS

The financial information set out in this Audited Preliminary Announcement does not constitute the Group's statutory accounts for the years ended 30 June 2012 or 2011, as defined in Section 435 of the Companies Act 2006, but is derived from those accounts.  Statutory accounts for the year ended 30 June 2011 have been delivered to the Registrar of Companies, and those for 2012 will be delivered in due course.  The auditors Grant Thornton UK LLP have reported on those accounts; their reports were (1) unqualified, (ii) did not include a reference to any matters to which the auditors 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 Board of Tristel plc approved the release of this audited Preliminary Announcement on 29 October 2012.

3.                    SEGMENTAL ANALYSIS

Management 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 Healthcare"). This segment generates approximately 83% of Group revenues.

The second segment, which constitutes 15% of the business activity, relates to manufacture and sale of disinfection and cleaning products, principally into veterinary and animal welfare sectors ("Animal healthcare").  During the year a change was made to the distribution model employed by the company in the sale of these products, whereby direct supply to the market place was instigated in place of the distributor channel previously employed.

The third segment addresses the pharmaceutical and personal care product manufacturing industries ("Contamination control"). This was a new activity in the prior year and has generated 2% of the Group's revenues this year.

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 Chief Executives Report on pages 5 to 11.  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, and strategic decisions are made on the basis of revenue and gross profit generating from each segment.

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

Tristel plc Notes to the Consolidated Financial Statements - continued For the year ended 30 June 2012

3.                   SEGMENTAL ANALYSIS - continued

	Human Healthcare	Animal Healthcare	Contamination Control	Group 2012		Human Healthcare		Animal healthcare	Contamination Control	Group 2011
	£'000	£'000	£'000	£'000		£'000		£'000	£'000	£'000
Revenue from external customers	9,038	1,666	235	10,939		7,163		2,086	38	9,287
Segment revenues	9,038	1,666	235	10,939		7,163		2,086	38	9,287
Cost of material	2,690	698	123	3,511		2,370		1,004	13	3,387
Gross Profit	6,348	968	112	7,428		4,793		1,082	25	5,900
Gross Profit %	70%	58%	48%	68%		67%		52%	66%	64%
Centrally incurred income and expenses not attributable to individual segments:
Other operating income				-						3
Depreciation and amortisation of non-financial assets				(1,050)						(663)
Other administrative expenses				(5,635)						(4,689)
Non-recurring items				(174)						-
Share based payments				14						(29)
Segment operating profit				583						522
Segment operating profit can be reconciled to Group profit before tax as follows:
Segmental operating profit				583						522
Finance income				7						12
Results from equity accounted associate				1						2
Finance costs				(13)						(28)
Group profit before tax				578						508

The Group's revenues from external customers are divided into the following geographical areas:-

	Human Healthcare	Animal Healthcare	Contamination Control	Group 2012		Human Healthcare	Animal healthcare	Contamination Control	Group 2011
	£'000	£'000	£'000	£'000		£'000	£'000	£'000	£'000
United Kingdom	7,138	1,486	199	8,823		6,159	2,086	38	8,283
Rest of the World	1,900	180	36	2,116		1,004	-	-	1,004
Group revenues	9,038	1,666	235	10,939		7,163	2,086	38	9,287

Tristel plc Notes to the Consolidated Financial Statements - continued For the year ended 30 June 2012

          3.                  SEGMENTAL ANALYSIS - continued

Revenues from external customers in the Group's domicile - "United Kingdom", as well as its other major markets, "Rest of the World" - have been identified on the basis of internal management reporting systems, which are also used for VAT purposes.

Human healthcare revenues were derived from a large number of customers, including £3.629m from a single customer which makes up 40.2% of this segment's revenue (2011:  £1.591m being 22.4%).  Animal healthcare revenues were derived from a number of customers, with the largest customer accountable for £1.404m, which represents 84.3% of turnover (2011: 100% from a single customer).

During the year 33.2% of the Group's revenues were earned from a single customer (2011: 22.8%).

The Group's non-current assets are divided into the following geographical areas:-

		2012		2011
		£'000		£'000
United Kingdom		8,996		9,103
Rest of the World		231		71
Non-current assets		9,227		9,174

4.                    NON RECURRING ITEMS

As a result of a change to the supply route for the group's veterinary products, the Group incurred costs which Management consider to be non-recurring. These relate to legal advice and the write off of obsolete inventory, amounting to £54,758 (2011: £nil).

In addition, during the year the Group carried out a re-structuring of its engineering function resulting in a provision against slow moving inventory held at the year end and staff redundancy costs, which in aggregate amount to £119,583 (2011:£nil).

5.                     TAXATION

The taxation charge represents:

		2012		2011
		£'000		£'000
Current taxation:-
Corporation tax		34		5
Adjustment in respect of earlier years		(354)		3
Total current tax		(320)		8
Deferred tax:-
Origination and reversal of temporary differences		229		63
Total deferred tax		229		63
Total tax charge in Income Statement		(91)		71

Tristel Plc Notes to the Consolidated Financial Statements - continued For the year ended 30 June 2012

5.                 TAXATION - continued

Factors affecting the tax charge

   The tax assessed for the year differs from the standard rate of corporation tax in the UK. The difference is

   explained below:

		2012		2011
		£'000		£'000
Profit on ordinary activities before tax		578		508
Profit on ordinary activities
multiplied by the standard rate of corporation tax
in the UK of 25.5% (2011: 28%)		147		142
Effects of:
Expenses not deductible for tax purposes		78		50
Different rate tax bands and change in tax rates		(21)		(20)
Enhanced relief on qualifying scientific research expenditure		(114)		(153)
Adjustment in respect of prior years		(354)		3
Tax losses not utilised and other timing differences		173		49
Total tax charge for year		(91)		71

The adjustment in respect of earlier years relates to prior year R&D tax claims received in the year.

6.                                DIVIDENDS

		2012		2011
Amounts recognised as distributions to equity holders in the year:		£'000		£'000
Ordinary shares of 1p each
Final dividend for the year ended 30 June 2011 of 0.12p
(2010:  1.4p) per share		48		464
Interim dividend for the year ended 30 June 2012 of 0.27p
(2011:  0.423p) per share		108		174
		156		638
Proposed final dividend for the year ended 30 June 2012 of 0.35p (2011: 0.12p) per share		140		48

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.

Tristel Plc Notes to the Consolidated Financial Statements - continued For the year ended 30 June 2012

7.                                EARNINGS PER SHARE

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

		2012		2011
		£'000		£'000
Retained profit for the financial year attributable to equity holders of the parent		707		476
		Shares '000 Number		Shares '000 Number
Weighted average number of ordinary shares for the purpose of basic earnings per share		39,985		37,305
Effect of dilutive potential ordinary shares
Share options		-		1,985
		39,985		39,290
Earnings per ordinary share
Basic		1.77p		1.27p
Diluted		1.77p		1.21p

The calculation of the weighted average number of shares is based on the years ended 30 June 2012 and 30 June 2011. The calculation of diluted earnings per share includes outstanding options on nil ordinary shares at 30 June 2012 (2011: 2,075,000).

8.                CALLED UP SHARE CAPITAL

Allotted, issued and fully paid	Number:			£
1 July 2010	33,142,596			331,426
Issued during the year	6,842,105			68,421
30 June 2011	39,984,701			399,847
Issued during the year	-			-
30 June 2012	39,984,701			399,847

No new shares were issued during the year.  (2011: On 23 November 2010 the Company issued 6,842,105 new ordinary shares of 1p each for an aggregate consideration of £3,900,000. The proceeds, after deduction of associated costs, amounted to £3,669,000, resulting in a credit to the Share premium account of £3,601,000.  The shares were issued to reduce bank borrowings, restructure a royalty obligation and fund the expansion of the business. )

9.                ANNUAL REPORT

The annual report and financial statements will be available on the company's web site www.tristel.com from 29 October 2012.  Printed copies will be posted to shareholders prior to the Company's Annual General Meeting taking place on 11 December 2012 in Snailwell, Newmarket.

 

END

 

 

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