Final Results

RNS Number : 0646U

Tristel PLC

13 October 2014

 



TRISTEL plc

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

Preliminary Audited Results for the year ended 30 June 2014

Tristel plc (AIM: TSTL), the manufacturer of infection prevention and contamination control products, announces audited preliminary results for the year ended 30 June 2014 ahead of 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 28% to £13.47m (2013: £10.56m)

·      Gross margin increased to 70% (2013: 66%)

·      EBITDA up 78% to £2.70m (Adjusted* 2013: £1.52m)

·      Pre-tax profit of £1.82m (Adjusted* 2013: £0.48m)

·      Basic earnings per share 3.25p (2013: loss of 3.16p)

·      Dividend per share for the full year up fourfold to 1.62p (2013: 0.4p)

·      Net cash inflow of £1.98m during year (2013: £nil)

·      Gross cash £2.66m (2013: £0.63m)

*Adjusted for non-recurring items of £2.23m

Operational Highlights

·      International sales up 32% to £4.5m (2013: £3.4m), now accounting for a third of total revenue

·      2.2 million instrument decontamination procedures carried out worldwide using Tristel Wipes (2013:1.7m)

·      Addition of 20,000sq ft warehouse to Newmarket facility. 

Paul Swinney, Chief Executive of Tristel plc, said:

"The results for the year reflect the significant progress Tristel has made since our restructuring began in 2012.  Group profits have returned to the levels reported in 2011 which marked the start of the diversification and geographical expansion that was necessary to replace the declining sales of the Group's legacy endoscopy products.  The replacement products, which focus principally upon the disinfection of medical instruments used in hospital out-patient departments, and the high-level disinfection of surfaces in critical areas, provide the Company with a largely uncontested global opportunity.  By focusing upon the Group's core competence of innovation and product development, and with a disciplined and targeted approach, I feel confident that Tristel will deliver continued growth into the future."

For further information:

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

Chairman's Statement

Tristel made material progress during 2014 as the full benefits of our restructuring over the previous 18 months has had a significant positive impact on our day-to-day operations and, critically, after some wait, on our financial results. The Company is now in good shape - we have managed the decline in our legacy products and we are confident in the future of the next generation product ranges that have replaced them. We are increasingly optimistic for future growth in those countries where we have invested in a direct sales operation. Furthermore, our market environment globally is moving increasingly in the direction of a more data driven approach to disinfection - a trend which sits well with our approach to the chlorine dioxide chemistry which is at the heart of Tristel's patent portfolio.

Our financial results for the year are most encouraging - we have seen a growth in revenues of 28% to £13.47 million (2013: £10.56 million). In 2014 we generated a pretax profit of £1.82 million which compares with a pretax loss in 2013 of £1.75 million. The favourable sales trends which were identified in the second half of 2013 continued into 2014 and we remain optimistic for the foreseeable future. This optimism is based on the following three characteristics of our business which we have worked hard to develop over recent years:

1.     Differentiated product positioning

Tristel has created a unique position in high level instrument disinfection in the ambulatory care market as well as sporicidical surface disinfection in hospitals - by focusing on chlorine dioxide. Revenues of our instrument disinfectants for ambulatory care have grown at a CAGR of 49% between 2005 and 2014. Revenues of our sporicidal surface disinfectants have grown at a CAGR of 72% between their first launch in 2007 and 2014. We also anticipate entry into new product segments in the near future.

2.     Products  supported by the regulatory environment and backed up by broad patent protection

Tristel's instrument decontamination and surface disinfection products are innovations that have proven to be both innovative and disruptive to existing technology. New and anticipated guidelines as well as the pending Biocidal Products Regulation lend support for our chlorine dioxide chemistry. Additionally, the investment costs required for compliance will ensure that only those companies who have invested in sufficiently rigorous manufacturing and quality control processes will meet these new challenges. Tristel is well placed on both counts.

Our chlorine dioxide chemistry benefits from strong intellectual property protection as well as know-how. Patent lives extend up to 2031 and we will continue to invest in a constant stream of new patent applications which are related to both new concepts as well as extensions of existing products.

3.     The market for instrument decontamination and disinfection is a global opportunity

Our growth outside the United Kingdom has been significant over the last 2 years, growing by 61% in 2013 and 32% in 2014. Our overseas operations are now cash positive. We anticipate much of our future growth will come from these operations, as hospitals across the world recognise the critical nature of infection prevention in general and, more specifically, see the cost/benefit arguments of chlorine dioxide chemistry versus the alternatives. Our business model is further enhanced by a high percentage of recurring revenues (c.96%) from consumable products that perform essential functions for our customers and which enable them to minimise capital spend, ongoing maintenance costs and investment in supporting infrastructure. Tristel is well placed to meet the challenges associated with increasingly cost centric global healthcare systems as well as the trends towards ambulatory care. 

EPS and dividend

Basic earnings per share were 3.25 pence (2013: loss of 3.16 pence). In line with our dividend policy, as stated in the Company's 2011 Report and Accounts, now that pre-tax profits have returned to a level in excess of £1.5 million, we will pay a dividend on the basis of 2 times cover.   As such the Board is recommending that the final dividend is 1.26 pence (2013: 0.32 pence) making a total dividend for the year of 1.62 pence (2013: 0.40 pence). If approved, the final dividend will be paid on 19 December 2014 to shareholders on the register at 21 November 2014. The corresponding ex-dividend date is 20 November 2014.

Board change

Having served on the Board for three years, and with the business in both good health and capable hands, I feel it is the appropriate time for me to hand over the reins to a successor. I shall be stepping down from my role as Non-Executive Chairman on the 15^th of October.  The Board has begun a search for a new Non-Executive Chairperson, and in the meantime my predecessor Francisco Soler will take over the role on an interim basis. 

Employees

Over my time as Chairman of Tristel I have been particularly impressed by the quality and loyalty of our workforce. Our leadership team have, over the years, developed a culture and way of working that is distinctive and has really helped us both to grow and to meet the challenges of servicing a demanding and varied customer base. Our Board is particularly indebted to the continued support of our employees and we are always conscious that such loyalty is not guaranteed and that we have a responsibility to both our shareholders and our employees to provide the leadership necessary to ensure Tristel's continued success.

Outlook

We are delighted with the outcome for 2014 - for the Company and for its shareholders and we remain optimistic for the immediate future. We believe that our Company is very well placed to take advantage of the current trends in the global disinfection market. However, we are realistic in our assessment of Tristel's market reach and recognise that our ambitions must be tempered by our size and that we must be cautious in the way in which we deploy our assets to meet the potential opportunities. We also recognise that in order for Tristel to build upon its position we will need to invest in new products and that innovation must remain at the core of our business. A disciplined and targeted approach to new product development and new market penetration (by segment and country), combined with effective management of our existing product range, will bring the continued successes that our customers, employees and our shareholders deserve.

Christopher Samler

Chairman

10 October 2014

Chief Executive's report

Tristel is a global supplier of infection prevention, contamination control and specialist hygiene products, manufacturing and selling products based upon its proprietary chlorine dioxide chemistry.  It sells products into 41 countries.

Exclusive focus upon infection prevention

With its three distinctive brands Tristel has become an internationally recognised force in its marketplace.  It is one of a very small number of companies with an established global footprint that can describe itself as being exclusively an infection prevention business. This focus is one of Tristel's great strengths.

When Tristel joined the AIM market in June 2005 all its customers were hospitals and the great majority were located in the United Kingdom. Since becoming a publicly traded company, and whilst maintaining its focus on microbial control, Tristel has taken its core competencies and its proprietary chlorine dioxide chemistry into two additional markets:  in 2011 it expanded into the sterile-packed disinfectants market serving clean rooms in hospitals and industry (we call this contamination control of critical environments); and in 2012 it entered the animal healthcare market focusing primarily on infection prevention in veterinary practices.

The division of revenues across these three portfolios during the past two years is shown as follows.

	2013-14	% of total revenue	2012-13	% of total revenue
	£		£
Human healthcare	11,518,000	85%	8,912,000	84%
Contamination control	1,190,000	9%	908,000	9%
Animal healthcare	762,000	6%	738,000	7%
	13,470,000		10,558,000

A High Growth Business

Tristel has maintained a high rate of revenue growth over the nine year period from 2005 to 2014. 

FY	Sales £'s
2004-5	3,009,000
2005-6	3,746,000
2006-7	5,148,000
2007-8	5,961,000
2008-9	6,847,000
2008-10	8,764,000
2010-11	9,287,000
2011-12	10,939,000
2012-13	10,558,000
2013-14	13,470,000

Managing this revenue growth has been a considerable challenge for the Company.

In 2005 Tristel had one primary source of revenue - from the disinfection of gastro-intestinal endoscopes - that was generated almost exclusively within the United Kingdom.  These revenues have declined during the past several years.  The Company's challenge, as a small business with limited resources, has been to replace them with revenues from new products and by expansion into new geographical markets. Notwithstanding the near eradication of the original revenues, we have succeeded in growing our business' top-line at a CAGR of 18% from 2004-5 to 2013-14.

In the hospital setting we now focus upon two distinct areas of infection prevention, ambulatory care and critical surfaces. Sales growth within both of these areas has exceeded the corporate CAGR of 18%.

Decontamination of instruments used in ambulatory care

We have moved instrument disinfection revenues away from gastro-intestinal endoscopy to the out-patient areas of the hospital.  We have achieved this rapid re-positioning of our product portfolio by innovating with our chlorine dioxide chemistry to create disinfectant products that are ideally suited for the small medical instruments used in ear, nose and throat; cardiology; ultrasound; urology; GI physiology and ophthalmology. In terms of reporting we now define this revenue stream as "ambulatory care" which substitutes for the term "non and single-lumened instruments" used in previous annual reports. 

In these areas there is a constant stream of patients requiring diagnostic and minor therapeutic procedures for which clinicians use small instruments that are relatively simple to decontaminate.  We have targeted these niches because they are not addressed by our competitors. Globally, revenues from these products have grown at a CAGR of 49% between 2004-5 and 2013-14.

FY	Sales £'s
2004-5	207,000
2005-6	442,000
2006-7	647,000
2007-8	1,178,000
2008-9	1,698,000
2008-10	2,073,000
2010-11	2,552,000
2011-12	4,366,000
2012-13	5,087,000
2013-14	7,329,000

Disinfection of critical surfaces in hospitals

Tristel's proprietary chlorine dioxide chemistry has two defining features: first, it kills bacterial spores very quickly; second, it is safe to use.  As a consequence, Tristel's surface disinfectants provide the most effective stratagem to control Clostridium difficile, one of the most problematic pathogens in hospitals. Globally, revenues of our surface disinfectants have grown at a CAGR of 72% between 2006-7 and 2013-14.

Via Human Healthcare						Via Contamination Control
FY	Sales £'s					FY	Sales £'s
2006-7	30,000					2011-12	54,000
2007-8	230,000					2012-13	54,000
2008-9	434,000					2013-14	74,000
2008-10	598,000
2010-11	867,000
2011-12	1,055,000
2012-13	784,000
2013-14	1,229,000

Expansion into new markets to exploit chlorine dioxide

Tristel entered the contamination control market in 2011 and the animal healthcare market in 2012.  It did so to take its core competencies of chemical manufacture, regulatory expertise and marketing to microbiologists into two new contiguous markets and in so doing create the opportunity to expand the potential of its chlorine dioxide technology.

In 2013-2014 Tristel continued to make progress in penetrating these markets. Contamination control global revenues increased to £1,190,000 from £908,000 in 2012-2013, an increase of 31%.  Animal healthcare global revenues increased to £762,000 in 2013-2014 from £738,000 in 2012-2013, an increase of 3%. 

International Expansion - a driver for continued growth

Whilst we have created a very dominant position in the hospital market in the United Kingdom we still have great untapped potential in all overseas markets. The primary reason is that we have not been present in overseas markets for as many years as we have in the United Kingdom, and whilst we sell each product from all three portfolios in the United Kingdom, at the present time we sell only selected products in overseas countries.

Group overseas sales 2008 to 2014

	£
2007-8	378,000
2008-9	450,000
2008-10	610,000
2010-11	932,000
2011-12	2,148,000
2012-13	3,403,000
2013-14	4,531,000

	2013-14	2012-13	Increase
	£	£
Human Healthcare overseas sales	4,079,000	3,066,000	33%

Contamination Control overseas sales

240,000

156,000

54%

Animal Healthcare overseas sales

212,000

181,000

17%

Our business model in the majority of countries in which we sell products is to use a national distribution partner.  During the year 41 distributors purchased Group products (2013: 42) with an aggregate value of £1,889,000 (2013: £1,736,000), an increase of 8.8%.

We have found that greater and more rapid penetration is achieved where we have established subsidiaries and branch offices in overseas markets. During the year our direct operations in New Zealand, China, Hong Kong, Russia and Germany generated aggregate revenues of £2,642,000 (2013: £1,667,000), an increase of 58.5%.

	2013-14	2012-13
	£	£
Overseas distributor sales	1,889,000	1,736,000
Overseas owned entity sales	2,642,000	1,667,000
	4,531,000	3,403,000

   Group Results and Finance

Revenue increased by 27.6% to £13,470,000 (2013:  £10,558,000), alongside a gross margin increase of four percentage points to 70% (2013: 66%).

Excluding amortisation of intangibles, share-based payments, non-recurring items, interest and results from associates, operating profits increased by 114% to £2,300,000 (2013: £1,075,000). Profit before tax for the year was £1,823,000 (2013: loss before tax £1,750,000). The resulting basic earnings per share was 3.25 pence (2013: loss of 3.16 pence).

Capital investments in the development of new products, patents and regulatory approvals resulted in additions to intangible assets of £479,000 (2013: £345,000). Purchases of plant, equipment, improvements to property, fixtures and fittings and motor vehicles totaled £677,000 (2013: £180,000). The improvements to property culminated in the addition to our Newmarket production facility of 20,000 square feet of warehousing space.

The level of profit during the year has resulted in cash and cash equivalents increasing to £2,664,000 as at 30 June 2014 from £627,000 at 30 June 2013.

Paul Swinney

Chief Executive

10 October 2014

Tristel plc Consolidated Income Statement For the year ended 30 June 2014

		Note	Year ended 30 June 2014		Year ended 30 June 2013
			£'000		£'000
Revenue			13,470		10,558
Cost of sales			(4,066)		(3,544)
Gross profit			9,404		7,014
Other operating income			-		38
Administrative expenses: Share-based payments			(15)		(16)
Depreciation and  amortisation			(885)		(1,026)
Other Non-recurring items		7	(6,685) -		(5,517) (2,231)
Total administrative expenses			(7,585)		(8,790)
Operating profit/(loss)			1,819		(1,738)
Finance income			6		6
Finance costs			(10)		(20)
Results from equity accounted associate			8		2
Profit/(loss) before tax			1,823		(1,750)
Taxation		4	(551)		438
Profit/(loss) after tax			1,272		(1,312)
Attributable to:
Non-controlling interests			(26)		(48)
Equity holders of parent			1,298		(1,264)
			1,272		(1,312)
Earnings/(loss) per share from total and continuing operations attributable to equity holders of the parent
Basic - pence		6	3.25		(3.16)
Diluted - pence		6	3.25		(3.16)

            All amounts relate to continuing operations. 

Tristel plc Consolidated Statement of Comprehensive Income For the year ended 30 June 2014

		Year ended 30 June 2014		Year ended 30 June 2013
		£'000		£'000
Profit/(loss) for the period		1,272		(1,312)
Other comprehensive income:
Items that will not be reclassified subsequently to profit and loss
Exchange differences on translation of foreign operations, related to non-controlling interests		15		(14)
Items that will be reclassified subsequently to profit and loss
Exchange differences on translation of foreign operations		34		(53)
Other comprehensive income for the period		49		(67)
Total comprehensive income for the period		1,321		(1,379)
Attributable to:
Non controlling interests		(11)		(60)
Equity holders of the parent		1,332		(1,319)
		1,321		(1,379)

Tristel plc Consolidated Statement of Changes in Equity For the year ended 30 June 2014

	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 2012	400	9,151	478	(74)	2,546	12,501	(89)	12,412
Transactions with owners
Dividends paid	-	-	-	-	(172)	(172)	-	(172)
Share-based payments - IFRS 2	-	-	-	-	16	16	-	16
Total transactions with owners	-	-	-	-	(156)	(156)	-	(156)
Loss for the year ended 30 June 2013	-	-	-	-	(1,264)	(1,264)	(48)	(1,312)
Other comprehensive income:- Exchange differences on translation of foreign operations	-	-	-	(53)	-	(53)	(14)	(67)
Total comprehensive income	-	-	-	(53)	(1,264)	(1,317)	(62)	(1,379)
30 June 2013	400	9,151	478	(127)	1,126	11,028	(151)	10,877
Transactions with owners
Dividends paid	-	-	-	-	(272)	(272)	-	(272)
Shares Issued	2	133	-	-	-	135	-	135
Share-based payments - IFRS 2	-	-	-	-	15	15	-	15
Total transactions with owners	2	133	-	-	(257)	(122)	-	(122)
Profit for the year ended 30 June 2014	-	-	-	-	1,298	1,298	(26)	1,272
Other comprehensive income:- Exchange differences on translation of foreign operations                                          -		-	-	34	-	34	15	49
Total comprehensive income	-	-	-	34	1,298	1,332	(11)	1,321
30 June 2014	402	9,284	478	(93)	2,167	12,238	(162)	12,076

Tristel plc Consolidated Balance Sheet As at 30 June 2014

				2014		2013
		Note		£'000		£'000
Non-current assets
Goodwill				667		667
Intangible assets				5,637		5,629
Property, plant and equipment				1,277		1,096
Deferred tax				83		307
				7,664		7,699
Current assets
Inventories				2,063		1,868
Trade and other receivables				2,690		2,554
Cash and cash equivalents				2,664		627
				7,417		5,049
Total assets				15,081		12,748
Capital and reserves
Share capital		8		402		400
Share premium account				9,284		9,151
Merger reserve				478		478
Foreign exchange reserve				(93)		(127)
Retained earnings				2,167		1,126
Equity attributable to owners of the parent				12,238		11,028
Non-controlling interests				(162)		(151)
Total equity				12,076		10,877
Current liabilities
Trade and other payables				2,538		1,683
Interest bearing loans and borrowings				42		65
Current tax				213		70
				2,793		1,818
Non-current liabilities
Interest bearing loans and borrowings Deferred tax				8 204		53 -
Total liabilities				3,005		1,871
Total equity and liabilities				15,081		12,748

Tristel plc Consolidated Cash Flow Statement For the year ended 30 June 2014

				2014		2013
		Note		£'000		£'000
Cash flows from operating activities
Cash generated from operating activities		i		3,250		759
Corporation tax received / (paid)				21		(50)
				3,271		709
Cash flows used in investing activities
Interest received				6		6
Purchase of intangible assets				(479)		(345)
Purchases of property, plant and equipment				(677)		(131)
Proceeds from sale of property, plant and equipment				72		40
Net cash used in investing activities				(1,078)		(430)
Cash flows from financing activities
Loans repaid				(66)		(96)
Interest paid				(10)		(20)
Cost of share issues				135		-
Dividends paid				(272)		(172)
Net cash used in financing activities				(213)		(288)
Net (decrease)/increase  in cash and cash equivalents				1,980		(9)
Cash and cash equivalents at the beginning of the period		ii		627		705
Exchange differences on cash and cash equivalents				57		(69)
Cash and cash equivalents at the end of the period		ii		2,664		627

Tristel plc Notes to the Consolidated Cash Flow Statement For the year ended 30 June 2014

i.  RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS
			2014		2013
			£'000		£'000
Profit/(loss) before tax			1,823		(1,750)
Depreciation of plant, property & equipment			416		464
Amortisation of intangible assets			469		566
Impairment of intangible assets			-		1,045
Impairment of investments			-		45
Impairment of goodwill			-		112
Impairment of plant, property & equipment			-		103
Results from associates			(8)		(2)
Share-based payments - IFRS2			15		16
Loss/(profit) on disposal of property, plant and equipment			2		(12)
Loss on disposal of intangible asset			5		3
Finance costs			10		20
Finance income			(6)		(6)
			2,726		604
(Increase)/decrease in inventories			(195)		111
(Increase)/decrease in trade and other receivables			(136)		277
Increase/(decrease) in trade and other payables			855		(233)
Cash generated from operations			3,250		759

   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 2014		30 June 2013
Year ended 30 June 2014			£'000		£'000
Cash and cash equivalents			2,664		627
			2,664		627

			30 June 2013		30 June 2012
Year ended 30 June 2013			£'000		£'000
Cash and cash equivalents			627		705
			627		705

Tristel plc Notes to the Consolidated Financial Statements For the year ended 30 June 2014

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 amendment to IFRS issued by the IASB, which is relevant to and effective for the Group's financial statements for the annual period beginning 1 July 2013:

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

IFRS 13 Fair value measurement (effective for periods beginning on or after 1 January 2013)

IAS 19 Employee Benefits

Outlines the accounting requirements for employee benefits, including short-term benefits (e.g. wages and salaries, annual leave), post-employment benefits such as retirement benefits, other long-term benefits (e.g. long service leave) and termination benefits. The standard establishes the principle that the cost of providing employee benefits should be recognised in the period in which the benefit is earned by the employee, rather than when it is paid or payable, and outlines how each category of employee benefits are measured, providing detailed guidance in particular about post-employment benefits. The application of this amendment has had no impact on the opening balance sheet or the statement of comprehensive income and so no prior year adjustment has been made.

IFRS 13 Fair value measurement

IFRS 13 clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It does not affect which items are required to be fair valued. The scope of IFRS 13 is broad and it applies for both financial and non-financial items for which other IFRSs require or permit fair value measurements or disclosures about fair value measurements except in certain circumstances. Its disclosure requirements need not be applied to comparative information in the first year of application. The Group has applied IFRS 13 for the first time in the current year.

Basis of consolidation

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2014. 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 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.

EU adopted IFRSs not yet applied

As of 30 June 2014, the following Standards and Interpretations are in issue but not yet effective and have not been adopted early by the Group:

·       IFRS 9 Financial Instruments (IASB effective date 1 January 2018)

·       IFRS 10 Consolidated Financial Statements (effective 1 January 2014)

·       IFRS 11 Joint Arrangements (effective  January 2013)

·       IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2014)

·       IAS 27 (Revised), Separate Financial Statements (effective 1 January 2014)

·       IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2014)

·       Investment Entities - Amendments to IFRS 10, IFRS 12 and IAS 27 (effective 1 January 2014)

·       Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 (effective 1 January 2014)

·       Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) (effective 1 January 2014)

·       Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) (effective 1 January 2014)

·       IFRS 15 Revenues from Contracts with Customers (effective 1 January 2017)

·       Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations (IASB effective date 1 January 2016)

·       Clarification of Acceptable Methods of Depreciation and Amortisation - Amendments to IAS 16 and IAS 38 (IASB effective date 1 January 2016)

·       Annual Improvements to IFRSs 2010-2012 Cycle (effective 1 July 2014)

·       Annual Improvements to IFRSs 2011-2013 Cycle (effective 1 July 2014)

·       Annual Improvements to IFRSs 2012-2014 Cycle (effective 1 January 2016)

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 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 2014 or 2013, as defined in Section 435 of the Companies Act 2006, but is derived from those accounts.  Statutory accounts for the year ended 30 June 2013 have been delivered to the Registrar of Companies, and those for 2014 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 10 October 2014.

3.        SEGMENTAL ANLAYSIS

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 includes products that incorporate the Company's chlorine dioxide chemistry, and are used primarily for infection control in hospitals ("Human Healthcare"). This segment generated approximately 86% (2013: 84%) of Group revenues.

The second segment, which constitutes 6% (2013: 7%) of the business activity, relates to manufacture and sale of disinfection and cleaning products, 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 9% (2013: 9%) of the Group'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.

	Human Healthcare	Animal Healthcare	Contamination Control	Group 2014		Human Healthcare		Animal healthcare	Contamination Control	Group 2013
	£'000	£'000	£'000	£'000		£'000		£'000	£'000	£'000
Revenue from external customers	11,518	762	1,190	13,470		8,912		738	908	10,558
Segment revenues	11,518	762	1,190	13,470		8,912		738	908	10,558
Cost of material	3,216	255	595	4,066		2,805		268	471	3,544
Gross Profit	8,302	507	595	9,404		6,107		470	437	7,014
Gross Profit %	72%	67%	50%	70%		69%		64%	48%	66%
Centrally incurred income and expenses not attributable to individual segments:
Other operating income				-						38
Depreciation and amortisation of non-financial assets				(885)						(1,026)
Other administrative expenses				(6,685)						(5,517)
Non-recurring items				-						(2,231)
Share based payments				(15)						(16)
Segment operating profit/(loss)				1,819						(1,738)
Segment operating profit can be reconciled to Group profit before tax as follows:
Segment operating profit/(loss)				1,819						(1,738)
Finance income				6						6
Results from equity accounted associate				8						2
Finance costs				(10)						(20)
Group profit/(loss) before tax				1,823						(1,750)

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

	Human Healthcare	Animal Healthcare	Contamination Control	Group 2014		Human Healthcare	Animal healthcare	Contamination Control	Group 2013
	£'000	£'000	£'000	£'000		£'000	£'000	£'000	£'000
United Kingdom	7,439	550	950	8,939		5,846	557	752	7,155
Rest of the World	4,079	212	240	4,531		3,066	181	156	3,403
Group revenues	11,518	762	1,190	13,470		8,912	738	908	10,558

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 £3,499m from a single customer which makes up 30% of this segment's revenue (2013:  £2.050m being 23%).  Animal healthcare revenues were derived from a number of customers, with the largest customer accountable for £0.209m, which represents 27% of revenue (2013: 6.6% from a single customer).

During the year 26% of the Group's revenues were earned from a single customer (2013: 19.4%).

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

		2014		2013
		£'000		£'000
United Kingdom		7,455		7,567
Rest of the World		126		132
Non-current assets		7,581		7,699

4.         TAXATION

The taxation charge represents:

		2014		2013
		£'000		£'000
Current taxation:-
Corporation tax		248		79
Adjustment in respect of earlier years		(125)		7
Total current tax		123		86
Deferred tax:-
Origination and reversal of temporary differences		428		(524)
Total deferred tax		428		(524)
Total tax charge/(credit) in Income Statement		551		(438)

Factors affecting the tax charge/(credit):

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

		2014		2013
		£'000		£'000
Profit/(loss) on ordinary activities before tax		1,823		(1,750)
Profit/(loss) on ordinary activities
multiplied by the standard rate of corporation tax
in the UK of 22.50% (2013: 23.75%)		410		(416)
Effects of:
Expenses not deductible for tax purposes		139		116
Different rate tax bands and change in tax rates		1		18
Enhanced relief on qualifying scientific research expenditure		(93)		(135)
Adjustment in respect of prior years		(125)		7
Income not taxable		(11)		-
Tax losses not utilised and other timing differences		230		(28)
Total tax charge/(credit) for year		551		(438)

5.         DIVIDENDS

		2014		2013
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 2013 of 0.32p
(2012:  0.35p) per share		128		140
Interim dividend for the year ended 30 June 2014 of 0.36p
(2013:  0.08p) per share		144		32
		272		172
Proposed final dividend for the year ended 30 June 2014 of 1.26p (2013: 0.32p) per share		507		128

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 are based on the following profits and numbers of shares:

		2014		2013
		£'000		£'000
Retained profit/(loss) for the financial year attributable to equity holders of the parent		1,298		(1,264)
		Shares '000 Number		Shares '000 Number
Weighted average number of ordinary shares for the purpose of basic earnings per share		39,989		39,985
Effect of dilutive potential ordinary shares
Share options				-
		39,989		39,985
Earnings/(loss) per ordinary share
Basic		3.25p		(3.16p)
Diluted		3.25p		(3.16p)

7.            NON RECURRING ITEMS

There were no non-recurring items in the year.  In the prior year a review and restructure of the business took place and as a result headcount fell by 15%; the operation in China was restructured to cease the drain on cash; and the IP portfolio in the Balance Sheet was reviewed with the result that certain assets relating to legacy products were impaired. These 'root and branch review' activities culminated in a non-cash exceptional charge of £2.2 million for the year ended 30 June 2013.

8.            CALLED UP SHARE CAPITAL

Allotted, issued and fully paid	Number:			£
30 June 2013	39,984,701			400,000
Issued during the year	250,000			2,000
30 June 2014	40,234,701			402,000

250,000 ordinary shares of 1 pence each, related to the exercise of 250,000 share options were issued during the year (2013:nil), for a total consideration of £135,000, being £2,000 equity and £133,000 share premium. The weighted average exercise price was 53.86 pence.

9.           ANNUAL REPORT

The annual report and financial statements will be available on the company's website www.tristel.com from 13 October 2014.  Printed copies will be posted to shareholders prior to the Company's Annual General Meeting taking place on 16 December 2014 in Snailwell, Newmarket.

 

END

 

 

FR LLFEDIDLFLIS