{"id":278803,"date":"2025-06-07T07:14:40","date_gmt":"2025-06-07T07:14:40","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/investing\/maynard-paton-tristel-new-chief-execs-financial-targets-keenly-awaited-after-record-h1-2024-announces-30-uk-growth-100-dividend-jump-bumper-84-gross-margin-and-100m-opportunity\/"},"modified":"2025-06-07T07:14:40","modified_gmt":"2025-06-07T07:14:40","slug":"maynard-paton-tristel-new-chief-execs-financial-targets-keenly-awaited-after-record-h1-2024-announces-30-uk-growth-100-dividend-jump-bumper-84-gross-margin-and-100m-opportunity","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=278803","title":{"rendered":"Maynard Paton | TRISTEL: New Chief Exec\u2019s Financial Targets Keenly Awaited After Record H1 2024 Announces 30% UK Growth, 100% Dividend Jump, Bumper 84% Gross Margin And \u2018$100m Opportunity\u2019 In North America"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div itemprop=\"text\">\n<p>01 October 2024<br \/><strong>By Maynard Paton<\/strong><\/p>\n<p>H1 2024 results summary for <strong>Tristel (TSTL)<\/strong>:<\/p>\n<ul class=\"wp-block-list\">\n<li>A record H1, displaying revenue up 20%, profit up 28% and the dividend up 100% underpinned by remarkable 30% UK growth and notable price increases accepted by the NHS.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>North America is now deemed a \u201c<em>$100m per annum opportunity<\/em>\u201d for TSTL\u2019s initial FDA-approved foam, although competition now involves an FDA-approved UV-light machine that may strengthen the wider argument for automated disinfections.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The new chief exec ticks a lot of boxes for marketing healthcare products in the US, but his stint at LiDCO was unspectacular and shareholders keenly await his strategic ambitions, financial targets and details of his LTIP package.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Although employee productivity has flat-lined, the financials remain in good shape with a bumper 84% gross margin and net cash approaching \u00a312m that could lead to another special dividend.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>A near-term 32x P\/E is not an obvious bargain, but a premium rating could be justified by further meaningful growth within established markets, the prospect of lucrative US royalties, the ongoing ability to raise prices and the possibility of successful R&amp;D. I continue to hold.<\/li>\n<\/ul>\n<p><span id=\"more-32378\"\/><\/p>\n<h2 class=\"gb-headline gb-headline-eb611563 gb-headline-text\"><strong>Contents<\/strong><\/h2>\n<h2 class=\"gb-headline gb-headline-36a77792 gb-headline-text\" id=\"news-links-share-data-disclosure\"><strong>News links, share data and disclosure<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li><strong>Share price: <\/strong>400p<\/li>\n<li><strong>Share count: <\/strong>47,650,093<\/li>\n<li><strong>Market capitalisation: <\/strong>\u00a3191m<\/li>\n<\/ul>\n<h2 class=\"gb-headline gb-headline-0b49d5ca gb-headline-text\" id=\"why-i-own\"><strong>Why I own TSTL<\/strong><\/h2>\n<figure class=\"gb-block-image gb-block-image-0b451712\"><img fetchpriority=\"high\" decoding=\"async\" width=\"970\" height=\"465\" class=\"gb-image gb-image-0b451712\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2021\/03\/TSTL-product-6x3-grid.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2021\/03\/TSTL-product-6x3-grid.png 970w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2021\/03\/TSTL-product-6x3-grid-300x144.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2021\/03\/TSTL-product-6x3-grid-768x368.png 768w\" sizes=\"(max-width: 970px) 100vw, 970px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Develops the \u201c<em>simplest, quickest and most affordable high-performance disinfection<\/em>\u201d for medical devices, and faces limited direct competition due to proprietary chemistry, instrument-manufacturer approvals, scientific testimonies and regulatory hurdles.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Enjoys a track record of superior growth founded upon a sizeable and resilient UK market position, alongside widening expansion opportunities abroad including the United States.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Boasts financials that showcase super gross margins, significant net cash, respectable cash conversion and relatively low operational capital.<\/li>\n<\/ul>\n<p><strong>Further reading: <\/strong><a href=\"https:\/\/maynardpaton.com\/2014\/03\/20\/tristel-plc-why-my-latest-purchase-could-double-within-3-years\/\">My TSTL Buy report<\/a><strong> | <\/strong><a href=\"https:\/\/maynardpaton.com\/tstl\/\">All my TSTL posts<\/a> <strong>|<\/strong> <a href=\"https:\/\/www.tristel.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">TSTL website<\/a> <\/p>\n<h2 class=\"gb-headline gb-headline-c9709115 gb-headline-text\" id=\"results-summary\"><strong>Results summary<\/strong><\/h2>\n<figure class=\"gb-block-image gb-block-image-0386be70\"><img loading=\"lazy\" decoding=\"async\" width=\"1010\" height=\"750\" class=\"gb-image gb-image-0386be70\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-summary.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-summary.png 1010w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-summary-300x223.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-summary-768x570.png 768w\" sizes=\"auto, (max-width: 1010px) 100vw, 1010px\"\/><\/figure>\n<h2 class=\"gb-headline gb-headline-8ea5bba9 gb-headline-text\" id=\"revenue-profit-dividend\"><strong>Revenue, profit and dividend<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li>An upbeat outlook from the preceding FY\u2026<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[FY 2023] \u201c<em>We now have the opportunity to establish a global footprint for our products and technology. <\/em><strong><em>The outlook for the Company is the strongest it has been in its 30 year history<\/em><\/strong><em>.\u201d\u00a0<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>\u2026followed by positive progress reported at December\u2019s AGM\u2026<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[RNS December 2023] <em>\u201cI am pleased to report that the Company has had <\/em><strong><em>a record first half <\/em><\/strong><em>with revenue for the six months ending 31 December 2023 expected to be<\/em><strong><em> \u00a320.7m, an increase of 18%<\/em><\/strong><em> compared to \u00a317.5m in the first half of last year. Revenue growth has been delivered across all our geographical markets. Gross margin remains above 80% in line with our expectations.<br \/>\u2026<br \/>The business is performing strongly on all fronts and the confidence that we expressed in October in our medium-term outlook remains unchanged. With the growth possibilities for our business stronger than ever, and as a business with no debt and <\/em><strong><em>forecast cash balances of approximately \u00a310.4m after payment of this year\u2019s final dividend <\/em><\/strong><em>on 22 December, we are in a strong position to capitalise upon our global leadership position in the medical device decontamination market.\u201d\u00a0<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>\u2026had already signalled an encouraging H1 2024.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>This H1 boasted a slightly better performance versus the figures predicted at the AGM.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>H1 revenue in fact gained 20% to \u00a320.9m to set a new H1 record:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-72033204\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-72033204\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart01.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart01.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart01-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>To underline how fast TSTL has grown during recent years, this H1\u2019s revenue exceeded the \u00a320.2m reported for FY 2017.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>This H1\u2019s 20% revenue advance exceeded the 15% target reiterated during the preceding FY:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[FY 2023]<br \/>\u201c<em>In October 2022 we established our financial plan for the three years to 30 June 2025, which was a continuation of the plan for the prior three-year period ending in June 2022. The three key financial targets of both the old and new plans are:<\/em><br \/><strong><em>1. Sales growth in the range of 10% to 15% per annum as an annual average over the three years<\/em><\/strong><em><br \/>2. The achievement in each year of an EBITDA margin (excluding share-based payment charge) of at least 25%, and<br \/>3. To increase profit before tax (excluding share-based payments) year-on-year, independently of the other two targets\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>TSTL commendably split the 20% revenue advance between volume and pricing:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<strong><em>Higher sales volume accounted for \u00a31.5m<\/em><\/strong><em> of the \u00a33.4m revenue growth and <\/em><strong><em>price increases accounted for the remaining \u00a31.9m<\/em><\/strong><em>. This represents an <\/em><strong><em>average price increase of 12%<\/em><\/strong><em>, reflecting the global inflationary environment. In the UK the increase has been higher because of supply agreements which require fixed pricing extending into the future.<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>If the average price increase was 12%, then volumes must have improved by approximately 8% to reach the 20% total revenue advance.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>For perspective, the comparable H1 witnessed an average 4% price rise that implied volumes advanced by approximately 12%:\u00a0<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[H1 2023] \u201c<em>Of the increase in revenue of \u00a32.4m, \u00a31.8m relates to additional volume and \u00a30.6m to pricing, <\/em><strong><em>which reflects a 4% global price rise<\/em><\/strong><em>.<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>Volume growth reducing from 12% during the comparable H1 to 8% during this H1 is not ideal.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Given this H1\u2019s average 12% price rise, management\u2019s H1 webinar unsurprisingly stressed future revenue would be driven by greater volumes rather than further inflationary increases:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>We have our financial targets of sales growth in the range of 10 to 15% but I think it is safe to say <\/em><strong><em>those growth rates will be absolutely very much volume-led<\/em><\/strong><em>. We do have a price increase annually but we generally pitch that at inflation.<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>Assuming <a href=\"https:\/\/www.bankofengland.co.uk\/monetary-policy\/inflation\" target=\"_blank\" rel=\"noreferrer noopener\">UK<\/a> and <a href=\"https:\/\/www.ecb.europa.eu\/mopo\/strategy\/pricestab\/html\/index.en.html\" target=\"_blank\" rel=\"noreferrer noopener\">EU<\/a> inflation both run at their targeted 2%, volumes need to advance by a minimum 8% annually to meet the group\u2019s 10-15% average revenue growth target.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>No doubt volume growth and price increases will be factors the new chief executive considers when (or if) he publishes TSTL\u2019s new financial targets (<a href=\"#boardroom\">see Boardroom<\/a>):<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-6eea1923\"><img loading=\"lazy\" decoding=\"async\" width=\"1010\" height=\"390\" class=\"gb-image gb-image-6eea1923\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-02.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-02.png 1010w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-02-300x116.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-02-768x297.png 768w\" sizes=\"auto, (max-width: 1010px) 100vw, 1010px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Without Brexit stock-piling, discontinued products and US regulatory costs, TSTL\u2019s profit progress has become easier to analyse. Only share-based payments remain a complicating factor (<a href=\"#share-options\">see Share options<\/a>).<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Including share-based payments, this H1\u2019s operating profit gained \u00a30.9m, or 36%, to set a new H1 record of \u00a33.4m:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-65f418f1\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-65f418f1\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart02.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart02.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart02-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Excluding share-based payments, this H1\u2019s operating profit gained \u00a30.9m, or 28%, to set a new H1 record of \u00a34.1m:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-32312a11\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-32312a11\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart03.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart03.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart03-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>The preceding FY revealed the ordinary dividend will now advance by at least 5% a year \u2014 irrespective of whether earnings rise or fall:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[FY 2023] \u201c<em>Going forward the Board\u2019s intention is to <\/em><strong><em>increase the dividend annually in line with the year\u2019s increase in EPS, committing to minimum dividend growth of 5%<\/em><\/strong><em>.<\/em>\u201d\u00a0<\/p>\n<ul class=\"wp-block-list\">\n<li>Whether the new chief executive will maintain this bold payout commitment\u00a0remains to be seen (<a href=\"#boardroom\">see Boardroom<\/a>).<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The H1 dividend was lifted a very welcome 100% to 5.24p per share and matched the doubling of the preceding FY\u2019s final payout:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-021b874a\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-021b874a\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart04.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart04.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart04-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>The doubled H1 dividend was still covered 1.65x by TSTL\u2019s 8.68p per share adjusted earnings.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s H1 webinar referred to a 40\/60% split between interim and final dividends\u2026<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\"><em>\u201cIt\u2019s not a straightforward doubling of the interim and a doubling of the final. The new dividend policy is that for the full year, the dividend will follow the same percentage increase as EPS achieved for the full year and with a floor of 5%, so we will always increase our dividend by 5%. But if EPS is increased by more, we will increase the dividend by more. <\/em><strong><em>We have a 40\/60% split of interim to final <\/em><\/strong><em>and the maths worked out that there\u2019s a doubling of the interim. It\u2019s just a simple calculation.\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>\u2026which, if implemented for FY 2024, implies the upcoming H2 2024 final payout will be unchanged at 7.88p per share.\u00a0<\/li>\n<\/ul>\n<h2 class=\"gb-headline gb-headline-6ca31244 gb-headline-text\" id=\"medical-device-decontamination\"><strong>Medical-device decontamination<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s wipes and foams that decontaminate medical devices remain by far the group\u2019s most successful products:<\/li>\n<\/ul>\n<div class=\"gb-container gb-container-2ddd0a17\">\n<div class=\"gb-inside-container\">\n<figure class=\"wp-block-embed is-type-video is-provider-vimeo wp-block-embed-vimeo wp-embed-aspect-16-9 wp-has-aspect-ratio\">\n<p>\n<iframe loading=\"lazy\" title=\"Discover why Wiping Works\" src=\"https:\/\/player.vimeo.com\/video\/704131216?h=e2cdf9ceed&amp;dnt=1&amp;app_id=122963\" width=\"825\" height=\"464\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write\"><\/iframe>\n<\/p>\n<\/figure>\n<\/div>\n<\/div>\n<ul class=\"wp-block-list\">\n<li>During this H1, 87% of revenue and 91% of gross profit were generated from the wipes and foams:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-4bde9f89\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-4bde9f89\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart05.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart05.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart05-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<figure class=\"gb-block-image gb-block-image-37a83455\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-37a83455\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart06.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart06.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart06-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>H1 revenue from the medical-device wipes and foams improved a super 25% to \u00a318.3m.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>TSTL implied the 25% advance had led to market-share gains: \u00a0<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>Tristel medical device sales grew by 25%, reaching \u00a318.3m. In all countries in which we sell we continue to <\/em><strong><em>build our market leadership<\/em><\/strong><em> position. We are also benefiting from an increase in diagnostic procedure numbers as hospitals worldwide continue to tackle backlogs caused by the pandemic.<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>This H1 provided a breakdown of revenue generated by different kinds of medical device:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-3ddc66e1\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"600\" class=\"gb-image gb-image-3ddc66e1\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-01-breakdown.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-01-breakdown.png 1200w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-01-breakdown-300x150.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-01-breakdown-1024x512.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-01-breakdown-768x384.png 768w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Decontaminating ultrasound probes represented 38% or \u00a38.0m of total H1 revenue (and 43% of H1 medical-device revenue).\u00a0<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[RNS June 2023] \u201c<strong><em>Approximately half <\/em><\/strong><em>of Tristel\u2019s global revenue is generated from the ultrasound market.<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>Decontaminating ultrasound probes appears to have become more significant to TSTL during this H1 versus the preceding FY:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-22efa25a\"><img loading=\"lazy\" decoding=\"async\" width=\"1160\" height=\"420\" class=\"gb-image gb-image-22efa25a\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FY-2023-slides03-revenue-by-device.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FY-2023-slides03-revenue-by-device.png 1160w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FY-2023-slides03-revenue-by-device-300x109.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FY-2023-slides03-revenue-by-device-1024x371.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FY-2023-slides03-revenue-by-device-768x278.png 768w\" sizes=\"auto, (max-width: 1160px) 100vw, 1160px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Revenue of \u00a311.7m earned from decontaminating ultrasound probes during the preceding FY supported 32% of the preceding FY\u2019s revenue, versus 38% for this H1.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Other hospital departments changing their revenue proportion between the preceding FY to this H1 were:\n<ul class=\"wp-block-list\">\n<li>Cardiology, from 21% to 18%;<\/li>\n<li>ENT, from 19% to 20%, and;<\/li>\n<li>\u2018Other\u2019, from 4% to 7%.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s H1 webinar reiterated the high levels of Tristel usage within the NHS:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>We measure [NHS penetration] by different areas of the hospital. As an example, we estimate\u2026 within the NHS around <\/em><strong><em>60-70% <\/em><\/strong><em>of ultrasound procedures\u2026 use a Tristel product. The ENT market is <\/em><strong><em>about the same level<\/em><\/strong><em> of penetration for Tristel products used to decontaminate Nasendoscopes. Within Cardiology for T probes, we have a very high level of penetration, in the region of <\/em><strong><em>85-90%<\/em><\/strong><em>\u2026 We do certainly sell into every hospital within the UK. In some hospitals we are widely used and in others less so.<\/em><strong>\u201c<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>Although TSTL helpfully disclosed the number of procedures during the comparable H1\u2026\u00a0<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-80b3686f\"><img loading=\"lazy\" decoding=\"async\" width=\"1080\" height=\"450\" class=\"gb-image gb-image-80b3686f\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-H1-2023-slides02.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-H1-2023-slides02.png 1080w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-H1-2023-slides02-300x125.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-H1-2023-slides02-1024x427.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-H1-2023-slides02-768x320.png 768w\" sizes=\"auto, (max-width: 1080px) 100vw, 1080px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>\u2026and the July 2023 open day\u2026<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-87510987\"><img loading=\"lazy\" decoding=\"async\" width=\"1030\" height=\"430\" class=\"gb-image gb-image-87510987\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/10\/TSTL-H1-2024-Open-Day-2023-slides01.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/10\/TSTL-H1-2024-Open-Day-2023-slides01.png 1030w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/10\/TSTL-H1-2024-Open-Day-2023-slides01-300x125.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/10\/TSTL-H1-2024-Open-Day-2023-slides01-1024x427.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/10\/TSTL-H1-2024-Open-Day-2023-slides01-768x321.png 768w\" sizes=\"auto, (max-width: 1030px) 100vw, 1030px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>\u2026 no mention of procedure numbers was made during this H1.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Revenue per procedure (and in particular, per ultrasound procedure) can help shareholders gauge the market potential of the United States (<a href=\"#north-america\">see North America<\/a>).<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>For what it is worth, both products have seen their prices increase by \u00a313 since <a href=\"https:\/\/maynardpaton.com\/2024\/01\/14\/tristel-positive-fy-2023-reveals-revenue-up-22-new-5-plus-dividend-growth-policy-and-mooted-38p-royalty-per-us-ultrasound-disinfection\/#medical-device-decontamination\">my FY 2023 write-up<\/a>.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The Trio Wipes system contains enough wipes to conduct 50 disinfections and therefore costs the purchaser \u00a37.54 per disinfection (\u00a3377\/50). The Duo ULT foam gives 310 doses \u2014 equivalent to 155 disinfection procedures \u2014 and therefore costs the purchaser \u00a31.70 per disinfection (\u00a3264\/155).\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s income will be less than \u00a37.54 or \u00a31.70 per disinfection because:\n<ul class=\"wp-block-list\">\n<li>A gross margin will be captured by the retailer selling the wipes and foams, and\/or;<\/li>\n<li>Major buyers can buy in bulk direct through TSTL at reduced prices. \u00a0<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 class=\"gb-headline gb-headline-46ac189c gb-headline-text\" id=\"surface-disinfection\"><strong>Surface disinfection<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li>FY revenue from TSTL\u2019s hospital-surface disinfectants fell 8% to \u00a31.6m:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-64f42398\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-64f42398\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart05.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart05.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart05-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>The preceding FY had blamed regulatory backlogs for delays to launching new surface products:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[FY 2023]<em> \u201cOur second product range, Cache, made much slower progress during the year. Revenue was \u00a33.3m compared to \u00a33.2m in the previous year. <\/em><strong><em>Part of the new Cache range is still in the product design and testing stage, and the part of the range which is ready to be actively marketed is waiting for regulatory approvals in key markets<\/em><\/strong><em>. <\/em><\/p>\n<p><em>In Europe, CE marking is required for medical device disinfectants, and while the Cache product range is intended for environmental surfaces, many of the surfaces around the patient are considered medical devices requiring CE marking as well as approval under the European Biocidal Products Regulation. Post Brexit, the UK introduced UKCA Marking Certification for medical devices, and we are waiting to receive UKCA approval for the new Cache products.\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>An announcement accompanying this H1 confirmed the regulatory backlogs had been cleared and regulatory approvals had been granted for TSTL\u2019s <a href=\"https:\/\/thecachecollection.com\/product\/tank-clo2-sporicidal-disinfectant\/\" target=\"_blank\" rel=\"noreferrer noopener\">TANK<\/a> system:\u00a0<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[RNS February 2024] \u201c<em>Tristel plc (AIM: TSTL), the manufacturer of infection prevention products utilising proprietary chlorine dioxide technology, announces that all reviews under the Medical Devices Regulation 2002 (\u201cUK MDR\u201d) and the European Union Medical Device Regulation 2017\/745 (\u201cEU MDR\u201d) for approval of the Company\u2019s TANK ClO\u2082 Sporicidal Disinfectant system <\/em><strong><em>have been successfully concluded and a positive recommendation for UKCA and MDR certification has been made<\/em><\/strong><em>.<\/em><\/p>\n<p><em>The TANK system and accompanying capsules are the newest additions to the Cache range, which provides sporicidal surface disinfection in a format which is a sustainable alternative to commonly used pre-wetted plastic wipes.\u201d<\/em><\/p>\n<figure class=\"gb-block-image gb-block-image-bfa37d11\"><img loading=\"lazy\" decoding=\"async\" width=\"790\" height=\"190\" class=\"gb-image gb-image-bfa37d11\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-Tank.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-Tank.png 790w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-Tank-300x72.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-Tank-768x185.png 768w\" sizes=\"auto, (max-width: 790px) 100vw, 790px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>The accompanying RNS claimed the approval provided the opportunity for \u201c<em>significant growth is sales<\/em>\u201d in a \u201c<em>largely untapped<\/em>\u201d surface-disinfection market:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\"><em>[RNS February 2024] \u201cFollowing MDR approvals Tristel will be able to accelerate sales activity for this product throughout Europe and across geographies that recognise the high standard of safety and quality demonstrated by products conforming to the new EU MDR. The Directors believe that approval, will give Tristel the opportunity to <\/em><strong><em>deliver significant growth in sales of the Cache product<\/em><\/strong><em> range going forward, targeting a <\/em><strong><em>largely untapped sporicidal surface disinfection market<\/em><\/strong><em>. The Company expects to officially launch these latest products in Europe before the current financial year end on 30 June 2024.<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Development of the new surface disinfectants has been slow going, with prototypes showcased as far back as FY 2018:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-818da3d0\"><img loading=\"lazy\" decoding=\"async\" width=\"1100\" height=\"510\" class=\"gb-image gb-image-818da3d0\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-FY-2018-slides-surface.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-FY-2018-slides-surface.png 1100w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-FY-2018-slides-surface-300x139.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-FY-2018-slides-surface-1024x475.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-FY-2018-slides-surface-768x356.png 768w\" sizes=\"auto, (max-width: 1100px) 100vw, 1100px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s surface disinfectants have struggled to take off due to their higher pricing versus less effective alternatives.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>But management\u2019s H1 webinar reiterated the new TANK product would offer pricing comparable to the low-cost alternatives:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<strong><em>Certainly the surface disinfection market is not willing to pay the premium that that the device disinfection market is willing to pay<\/em><\/strong><em>.<\/em><\/p>\n<p><em>So we\u2019ve designed our [TANK] product for two purposes: one, to address bleach, which is used to mop floors and clean large surface areas within the hospital, and; two, to be used for damp-dusting around the patient, so mattresses, UV poles, trolleys, bedside tables, all of those areas where patients are placed and they are high touch surfaces so in that instance a sporicidal disinfectant is really, really important.\u00a0<\/em><\/p>\n<p><em>Not every hospital can afford to use a sporicide around the patient, so <\/em><strong><em>we are bringing our product to market at the lowest possible price<\/em><\/strong><em> to combat the products that are incumbent within floor cleaning, which is bleach, and near patient areas, which tend to be plastic wipes pulled out of a flow wrap for continual use. <\/em><strong><em>We can we can rival both of those products and price [TANK] at the lower of the two prices<\/em><\/strong>.\u201d<\/p>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s H1 webinar repeated claims the new surface products could one day generate sales equal to those of the medical-device disinfectants:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\"><em>\u201cWe have valued the surface-disinfection market at <\/em><strong><em>\u00a34<\/em><\/strong><strong><em> billion<\/em><\/strong><em> globally. How far do we think we can go with our Cache product range? I\u2019m not going to say when, <\/em><strong><em>but in time we expect it to rival the size of our medical-device sales.\u00a0<\/em><\/strong><em> It is a huge market. It\u2019s a niche for us because we provide a very high disinfecting performance level and we can do that at the price of a low- or intermediate-level competitive product. So there is a huge opportunity for us to be transformational in the surface-disinfection market. <\/em><strong><em>Although it sounds like a big ask to grow our Cache market to the size of our Tristel market, there is the potential for it.<\/em><\/strong><em>\u201c<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Medical-device revenue of \u00a318m was 11x surface-disinfection revenue during this H1.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The drawback to surface disinfectants for shareholders may be their significantly lower price point compared to the medical-device wipes and foams.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Enormous volumes will be needed for surface disinfectants to represent a notable proportion of TSTL\u2019s business.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>For example, management\u2019s <a href=\"https:\/\/maynardpaton.com\/2018\/10\/26\/tristel-2018-profit-advances-14-before-hefty-share-based-payments-as-bizarre-management-decision-delays-fda-application-once-again\/\">FY 2018 presentation<\/a> suggested the NHS was purchasing low-grade surface wipes at 2p a pop.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>For perspective, assuming TSTL price-matches the 2p, selling the TANK equivalent of 900 million surface wipes \u2014 i.e. 450,000 TANK capsules \u2014 would equal the \u00a318m revenue from medical devices during this H1.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/thecachecollection.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">This TSTL website<\/a> showcases the new surface disinfectants and their environmental credentials versus pre-wetted plastic wipes:<\/li>\n<\/ul>\n<div class=\"gb-container gb-container-ac2d8c1f\">\n<div class=\"gb-inside-container\">\n<figure class=\"wp-block-embed is-type-video is-provider-vimeo wp-block-embed-vimeo wp-embed-aspect-16-9 wp-has-aspect-ratio\">\n<p>\n<iframe loading=\"lazy\" title=\"The Cache Collection\" src=\"https:\/\/player.vimeo.com\/video\/782581736?dnt=1&amp;app_id=122963\" width=\"825\" height=\"464\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write\"><\/iframe>\n<\/p>\n<\/figure>\n<\/div>\n<\/div>\n<ul class=\"wp-block-list\">\n<li>In theory at least, a much more effective surface cleaner that is priced identically to bleach and low-grade plastic wipes \u2014 as well as being much more environmentally friendly \u2014 ought to have a big future\u2026<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>\u2026 or leave TSTL with very awkward questions to answer should surface-disinfection sales continue to stagnate.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Another awkward question might concern the Trio Wipes system using plastic wipes when TSTL is promoting the environmental benefits of TANK against similar wipes:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-e648b58a\"><img loading=\"lazy\" decoding=\"async\" width=\"1228\" height=\"691\" class=\"gb-image gb-image-e648b58a\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FY-2022-slides04-H1-ESG.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FY-2022-slides04-H1-ESG.png 1228w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FY-2022-slides04-H1-ESG-300x169.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FY-2022-slides04-H1-ESG-1024x576.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FY-2022-slides04-H1-ESG-768x432.png 768w\" sizes=\"auto, (max-width: 1228px) 100vw, 1228px\"\/><\/figure>\n<h2 class=\"gb-headline gb-headline-ed58e35d gb-headline-text\" id=\"uk\"><strong>UK\u00a0<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li>The UK remains TSTL\u2019s largest individual market after H1 revenue gained a startling 30% to to set a new six-month UK record of \u00a38.2m:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-219f1429\"><img loading=\"lazy\" decoding=\"async\" width=\"1130\" height=\"500\" class=\"gb-image gb-image-219f1429\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-uk.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-uk.png 1130w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-uk-300x133.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-uk-1024x453.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-uk-768x340.png 768w\" sizes=\"auto, (max-width: 1130px) 100vw, 1130px\"\/><\/figure>\n<figure class=\"gb-block-image gb-block-image-a12c2d66\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-a12c2d66\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart07.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart07.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart07-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>The aforementioned \u201c<em>supply agreements which require fixed pricing\u201d<\/em> for the NHS undoubtedly underpinned the 30% improvement.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>If UK volumes matched group volumes and increased by approximately 8% during this H1, then NHS price increases may therefore have been approximately 20% \u2014 albeit with NHS prices fixed thereafter for the next few years.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>UK progress has in the past been influenced by Brexit stock-piling and sales of legacy\/discontinued \u2018Other\u2019 products.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>But a clearer picture is now emerging about TSTL\u2019s UK efforts \u2014 and a 30% sales increase that was mentioned only briefly during management\u2019s H1 webinar\u2026<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<strong><em>Within the UK, we\u2019re reporting 30% growth.<\/em><\/strong><em> So again, very encouraging for us with new and an increasing number of customers. Our procedure numbers are up and our market penetration continues to increase<\/em>.\u201d<\/p>\n<ul class=\"wp-block-list\">\n<li>\u2026might suggest a very favourable pricing agreement with the NHS that TSTL does not want to publicise.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Indeed, UK price increases for medical-device wipes and foams may have increased by much more than 20%, given such revenue during this H1 advanced by a staggering <strong>43%<\/strong> to \u00a36.6m:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-68862387\"><img loading=\"lazy\" decoding=\"async\" width=\"1130\" height=\"500\" class=\"gb-image gb-image-68862387\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-04-uk.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-04-uk.png 1130w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-04-uk-300x133.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-04-uk-1024x453.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-04-uk-768x340.png 768w\" sizes=\"auto, (max-width: 1130px) 100vw, 1130px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Medical-device UK revenue supported 80% of total UK revenue during this H1, the highest proportion ever:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-a50c22f9\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-a50c22f9\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart08.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart08.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart08-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><figcaption class=\"gb-headline gb-headline-8423cdea gb-headline-text\"><em><sub>(H1\/H2 2022 figures not disclosed)<\/sub><\/em><\/figcaption><\/figure>\n<ul class=\"wp-block-list\">\n<li>The NHS price increase helped total UK revenue to represent 39% of total H1 revenue \u2014 the highest six-monthly UK proportion since H1 2021:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-cbfd18c1\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-cbfd18c1\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart09.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart09.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart09-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Longer term though, UK revenue has progressively become a smaller part of TSTL as the group expanded overseas through deft purchases of international distributors (<a href=\"#overseas\">see Overseas<\/a>):<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-647bce9f\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-647bce9f\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart08.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart08.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart08-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Still, the UK may continue to expand at a respectable rate; the 2023 annual report (<a href=\"https:\/\/maynardpaton.com\/2024\/01\/14\/tristel-positive-fy-2023-reveals-revenue-up-22-new-5-plus-dividend-growth-policy-and-mooted-38p-royalty-per-us-ultrasound-disinfection\/#comment-13383\">point 19e<\/a>) disclosed a 9% revenue growth rate was employed to test the value of TSTL\u2019s UK goodwill:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[AR 2023] \u201c<em><strong>For Tristel UK<\/strong>, the key assumptions used to determine the recoverable value of goodwill are those regarding discount rates and growth rates\u2026 <strong>Based on a revenue growth rate of <\/strong><\/em><strong><em>9%<\/em><\/strong><em>, the net present value of future cash flows exceeds the carrying value of \u00a38.602m by \u00a364.390m, as such no impairment has been recorded.<\/em>\u201d\u00a0<\/p>\n<ul class=\"wp-block-list\">\n<li>This H1 revealed segmental profit for the UK and other sales regions:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-bb1d6444\"><img loading=\"lazy\" decoding=\"async\" width=\"980\" height=\"540\" class=\"gb-image gb-image-bb1d6444\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-segment-uk.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-segment-uk.png 980w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-segment-uk-300x165.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-segment-uk-768x423.png 768w\" sizes=\"auto, (max-width: 980px) 100vw, 980px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>A UK pre-tax profit of \u00a33.0m represented 86% of group pre-tax profit, despite UK sales representing 39% of total revenue.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s preceding FY webinar explained the UK profit bias, citing the group\u2019s \u201c<em>transfer pricing policy<\/em>\u201d and wishing to \u201c<em>achieve the best tax profile<\/em>\u201c.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>All TSTL\u2019s manufacturing occurs in the UK, and the products are sold to the group\u2019s overseas divisions on an \u2018arm\u2019s length\u2019 basis for resale within their respective markets.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>TSTL therefore registers all of its \u2018manufacturing profit\u2019 within the UK.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s preceding FY webinar noted all the overseas sales regions have their profit margin set at 4.5%.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>A 4.5% margin was once again declared for all of the overseas regions for this H1:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-15b7b15e\"><img loading=\"lazy\" decoding=\"async\" width=\"980\" height=\"540\" class=\"gb-image gb-image-15b7b15e\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-segment-margin.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-segment-margin.png 980w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-segment-margin-300x165.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-segment-margin-768x423.png 768w\" sizes=\"auto, (max-width: 980px) 100vw, 980px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Trailing twelve-month UK revenue of \u00a313.7m still provides a good benchmark for the sales potential of other countries.<\/li>\n<\/ul>\n<h2 class=\"gb-headline gb-headline-3a91a319 gb-headline-text\" id=\"overseas\"><strong>Overseas<\/strong>\u00a0<\/h2>\n<ul class=\"wp-block-list\">\n<li>Overseas revenue is derived from a mix of direct operations and independent distributors that combine to sell within more than 30 countries:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-c30b7c00\"><img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"400\" class=\"gb-image gb-image-c30b7c00\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-website-worldwide.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-website-worldwide.png 800w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-website-worldwide-300x150.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-website-worldwide-768x384.png 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Overseas revenue climbed 13% to \u00a312.7m during this H1 to set a new six-month Overseas record:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-33be1f52\"><img loading=\"lazy\" decoding=\"async\" width=\"1130\" height=\"500\" class=\"gb-image gb-image-33be1f52\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-overseas1.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-overseas1.png 1130w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-overseas1-300x133.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-overseas1-1024x453.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-overseas1-768x340.png 768w\" sizes=\"auto, (max-width: 1130px) 100vw, 1130px\"\/><\/figure>\n<figure class=\"gb-block-image gb-block-image-65a64169\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-65a64169\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart10.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart10.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart10-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Overseas sales of the \u2018core\u2019 medical-device disinfection products gained 16% to \u00a311.7m:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-5d0b64d9\"><img loading=\"lazy\" decoding=\"async\" width=\"1130\" height=\"500\" class=\"gb-image gb-image-5d0b64d9\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-04-overseas.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-04-overseas.png 1130w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-04-overseas-300x133.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-04-overseas-1024x453.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-04-overseas-768x340.png 768w\" sizes=\"auto, (max-width: 1130px) 100vw, 1130px\"\/><\/figure>\n<figure class=\"gb-block-image gb-block-image-04f5cede\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-04f5cede\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart20.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart20.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart20-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><figcaption class=\"gb-headline gb-headline-7e84d4ab gb-headline-text\"><em><sub>(H1\/H2 2022 figures not disclosed)<\/sub><\/em><\/figcaption><\/figure>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s Overseas subsidiaries registered differing H1 revenue progress:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-0b86110a\"><img loading=\"lazy\" decoding=\"async\" width=\"1130\" height=\"500\" class=\"gb-image gb-image-0b86110a\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-overseas2.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-overseas2.png 1130w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-overseas2-300x133.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-overseas2-1024x453.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-03-overseas2-768x340.png 768w\" sizes=\"auto, (max-width: 1130px) 100vw, 1130px\"\/><\/figure>\n<figure class=\"gb-block-image gb-block-image-7a38ee24\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-7a38ee24\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart13.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart13.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart13-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><figcaption class=\"gb-headline gb-headline-b9dabf65 gb-headline-text\"><em><sub>(H1\/H2 2022 figures not disclosed)<\/sub><\/em><\/figcaption><\/figure>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s H1 webinar claimed the static progress within the Asian operations was due to lower demand for hospital-surface disinfectants:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>Asia has been a bit of a conundrum for us. China, Hong Kong, Malaysia and Singapore have been flat during the six months. The underlying mechanics of that are <\/em><strong><em>that our medical-device business grew but our Cache surface product sales declined very slightly,<\/em><\/strong><em> the reason for which we think is down to pricing.\u00a0 But with the recent approval of TANK, we believe we can go back into those hospitals in Asia and demonstrate the product and offer it at a lower price, which will enable us to get back onto a growth trajectory within Asia.<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>That earlier slide did show APAC surface-disinfection sales down 33%.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s H1 webinar noted the impressive achievements of the third-party distributors:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<strong><em>Our international third-party distributors achieved the highest level of growth within the entire business of 43%<\/em><\/strong><em> which is really encouraging\u2026 because it demonstrates that in these in these younger markets the same thing is happening as has happened in the early stages of our direct-sales teams.<\/em><\/p>\n<p>We are achieving high growth rates in particular, we\u2019ve noticed the Middle East is a very encouraging area for us. <strong><em>Saudi sales grew by<\/em><\/strong><strong><em>\u00a3230,000<\/em><\/strong><em> of that \u00a3600,000 growth.\u00a0 <\/em><strong><em>Spain increased by over a \u00a3100,000<\/em><\/strong><em> and <\/em><strong><em>Ireland <\/em><\/strong><strong><em>and the UAE were all really strong contributors<\/em><\/strong><em> to our distributor growth number.\u201d\u00a0<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Third-party distributors that perform well can become acquisition targets for TSTL.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>I calculate:\n<ul class=\"wp-block-list\">\n<li>Annual Australasian sales (i.e. Australia and New Zealand) have since climbed 126% from approximately AU$3.9m to approximately AU$8.8m (7.5-year CAGR: 11%);<\/li>\n<li>Annual Western Europe sales (i.e. Belgium, Netherlands and France) have since climbed approximately 128% from \u20ac3.1m to approximately \u20ac7.0m (5.5-year CAGR: 16%), and;<\/li>\n<li>Annual Southern Europe sales (i.e. Italy) have since climbed 146% from \u20ac700k to approximately \u20ac1.7m (4.5-year CAGR: 22%):<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-a7a448da\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-a7a448da\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart13.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart13.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart13-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>In addition, TSTL established a Malaysian subsidiary at the start of FY 2021 after recruiting the team that had worked previously as the country\u2019s distributor. Annual Malaysian revenue currently runs at \u00a30.8m.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>And TSTL paid \u00a3339k during the preceding FY for a distributor selling to the Middle East and North Africa. TSTL has yet to disclose the revenue from this operation.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s H1 webinar claimed there was \u201c<em>still a lot to go for here within Europe\u201d.<\/em><\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Mind you, not every foreign market has been performing strongly. The 2023 annual report (<a href=\"https:\/\/maynardpaton.com\/2024\/01\/14\/tristel-positive-fy-2023-reveals-revenue-up-22-new-5-plus-dividend-growth-policy-and-mooted-38p-royalty-per-us-ultrasound-disinfection\/#comment-13383\">point 19c<\/a>) disclosed revenue within Belgium and the Netherlands <strong><em>declined<\/em><\/strong> during the preceding FY:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[AR 2023] \u201c<strong><em>Management has considered the sales decline shown in Belgium and Netherlands in the current year <\/em><\/strong><em>and sensitised the recoverable value calculation to show 2-7% sales growth over the five-year period and an increasing cost base of between 4% and 7%, assuming all other assumptions remain unchanged.<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>France may therefore have performed very well given total Western Europe sales gained 11% during this H1.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>And TSTL has barely mentioned its progress within India after first gaining regulatory approval from the country during 2019.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The aforementioned positive H1 webinar references to Spain and Ireland\u2026<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<strong><em>Spain increased by over a \u00a3100,000<\/em><\/strong><em> and <\/em><strong><em>Ireland <\/em><\/strong><strong><em>and the UAE were all really strong contributors<\/em><\/strong><em> to our distributor growth\u00a0 number.\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li><em>\u2026<\/em>coupled with dormant subsidiaries in both countries\u2026<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[FY 2023] \u201c<em>We have subsidiaries in the United States, Japan, India, <\/em><strong><em>Spain<\/em><\/strong><em> and <\/em><strong><em>Ireland<\/em><\/strong><em> which are not yet active in terms of selling.\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li><em>\u2026<\/em>suggests the two nations may become TSTL\u2019s next in-house operations.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>One subsidiary that has recently moved from dormant to active is the United States.<\/li>\n<\/ul>\n<h2 class=\"gb-headline gb-headline-500e87ae gb-headline-text\" id=\"north-america\"><strong>North America<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li>TSTL received regulatory approval for selling an ultrasound-probe disinfectant in the United States during June 2023, and the preceding FY confirmed the first US orders had been \u201c<em>shipped and invoiced<\/em>\u201c:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\"><em>[FY 2023]<\/em><br \/><strong><em>Sales and marketing:<br \/>First orders shipped &amp; invoiced<\/em><\/strong><em> <\/em><br \/><em>\u2022 Parker distributors include: Medline Industries \/ Henry Schein \/ Owens &amp; Minor \/ McKesson Corp <\/em><br \/><em>\u2022 Listing in hospital and distributor procurement systems underway <\/em><br \/><em>\u2022 FY24 Parker exhibiting at 7 major USA conferences and Innova at 2 major Canadian conferences, supported by Tristel team<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>This H1 revealed the initial US orders were \u201c<em>shipped and invoiced<\/em>\u201c for \u201c<em>beta testing<\/em>\u201c:\u00a0<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>Parker\u2019s manufacturing processes have been validated by our quality team and production is now underway. <\/em><strong><em>The product has been through beta testing at a number of healthcare institutions in the United States,<\/em><\/strong><em> with very positive feedback. Parker Laboratories plans an extensive marketing and trade show programme throughout 2024 and is in the process of expanding its salesforce in order to capitalise on the potential that Tristel ULT represents.<\/em>\u201d\u00a0<\/p>\n<ul class=\"wp-block-list\">\n<li>\u201c<em>Beta testing<\/em>\u201d suggests US hospitals conduct a trial period before committing to proper orders.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>This H1 revealed North American income of \u00a346k during the first \u201c<em>ten weeks of activity<\/em>\u201c:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>During the first <\/em><strong><em>ten weeks of activity<\/em><\/strong><em> our revenue and royalty income from North America totalled <\/em><strong><em>\u00a346k.<\/em><\/strong><em> We are very encouraged by this positive start.<\/em>\u201d\u00a0<\/p>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s H1 webinar reiterated TSTL collects a 24% royalty on US product sales, which implies US manufacturing partner <strong><a href=\"https:\/\/www.parkerlabs.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Parker Laboratories<\/a><\/strong> generated US revenue via TSTL of up to \u00a3192k.<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-8645c058\"><img loading=\"lazy\" decoding=\"async\" width=\"1220\" height=\"230\" class=\"gb-image gb-image-8645c058\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-Parker-website-TSTL-ULT.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-Parker-website-TSTL-ULT.png 1220w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-Parker-website-TSTL-ULT-300x57.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-Parker-website-TSTL-ULT-1024x193.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-Parker-website-TSTL-ULT-768x145.png 768w\" sizes=\"auto, (max-width: 1220px) 100vw, 1220px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>The <a href=\"https:\/\/maynardpaton.com\/2024\/01\/14\/tristel-positive-fy-2023-reveals-revenue-up-22-new-5-plus-dividend-growth-policy-and-mooted-38p-royalty-per-us-ultrasound-disinfection\/#united-states\">preceding FY\u2019s webinar<\/a> said US hospitals were expected to pay between $3 and $3.50 per disinfection procedure for <a href=\"https:\/\/tristel.com\/us-en\/product\/tristel-ult\/\" target=\"_blank\" rel=\"noreferrer noopener\">TSTL\u2019s foam<\/a>, with Parker collecting $2 and its appointed sales distributors capturing between $1 and $1.50.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s 24% royalty therefore equates to 24% of $2 = $0.48 = 36p per US disinfection with GBP:USD at 1.33.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Between $3 to $3.50 is equivalent to between \u00a32.26 to \u00a32.63, and is 33%-plus\u00a0 greater than the aforementioned \u00a31.70 per disinfection when buying the <a href=\"https:\/\/www.wms.co.uk\/Equipment\/Diagnostic\/Dopplers\/Tristel-Duo-for-Ultrasound-2-x-125ml\/p\/D54688\" target=\"_blank\" rel=\"noreferrer noopener\">equivalent foam within the UK<\/a>.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s H1 webinar disclosed Parker was \u201c<em>doubling<\/em>\u201d its national salesforce, which may imply Parker could capture more of the $3 to $3.50 per disinfection for itself, which in turn would give a greater value to TSTL\u2019s 24% royalty.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>TSTL previously indicated US hospitals should undertake 43 million \u2018high level\u2019 ultrasound-disinfection procedures a year: \u00a0<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-5081f40f\"><img loading=\"lazy\" decoding=\"async\" width=\"1140\" height=\"570\" class=\"gb-image gb-image-5081f40f\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-FDA-2023-slides-usa-landscape.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-FDA-2023-slides-usa-landscape.png 1140w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-FDA-2023-slides-usa-landscape-300x150.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-FDA-2023-slides-usa-landscape-1024x512.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-FDA-2023-slides-usa-landscape-768x384.png 768w\" sizes=\"auto, (max-width: 1140px) 100vw, 1140px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>This H1\u2019s webinar reckoned North American hospitals require 50 million \u2018high-level\u2019 ultrasound disinfection procedures annually\u2026<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-b918755e\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"570\" class=\"gb-image gb-image-b918755e\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-05.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-05.png 1200w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-05-300x143.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-05-1024x486.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-05-768x365.png 768w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>\u00a0 \u2026which translate into a \u201c<em>$100m per annum opportunity\u201d<\/em> for TSTL and Parker Labs.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>50 million procedures at the aforementioned $2 per procedure for Parker gives that $100m.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>A \u201c<em>$100m opportunity<\/em>\u201d leads to a potential $24m ultrasound-royalty maximum for TSTL, and \u2014 using the aforementioned $3 to $3.50 per procedure \u2014 implies a possible maximum expenditure by North American hospitals of $175m on TSTL\u2019s ultrasound foam.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The US benchmark for ultrasound-probe decontamination is set by <strong><a href=\"https:\/\/www.nanosonics.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Nanasonics (NAN)<\/a><\/strong>, the quoted Australian group that manufactures the Trophon machine. Trophon machines are limited to cleaning ultrasound probes only:<\/li>\n<\/ul>\n<div class=\"gb-container gb-container-0f969086\">\n<div class=\"gb-inside-container\">\n<figure class=\"wp-block-embed is-type-video is-provider-vimeo wp-block-embed-vimeo wp-embed-aspect-16-9 wp-has-aspect-ratio\">\n<p>\n<iframe loading=\"lazy\" title=\"T2 UK\" src=\"https:\/\/player.vimeo.com\/video\/340375564?dnt=1&amp;app_id=122963\" width=\"825\" height=\"464\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write\"><\/iframe>\n<\/p>\n<\/figure>\n<\/div>\n<\/div>\n<ul class=\"wp-block-list\">\n<li>That TSTL slide above indicates 50% of ultrasound-probe disinfection procedures within the US are performed by a Trophon machine.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>NAN\u2019s FY 2024 results disclosed revenue of AU$170m, of which AU$154m was earned within North America:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-c9b97a84\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-c9b97a84\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart11.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart11.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart11-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>AU$154m perhaps coincidentally translates to approximately $101m, which matches the aforementioned \u201c<em>$100m opportunity\u201d<\/em> for TSTL and Parker Labs.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>NAN\u2019s FY 2024 results also confirmed 30,390 Trophons now operating in North America, which equates to revenue per Trophon machine of approximately $3,440:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-bc18af51\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-bc18af51\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart12.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart12.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart12-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>NAN increased the potential of its North American market from 40,000 to 60,000 Trophons during FY 2021:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-b1f0b7cf\"><img loading=\"lazy\" decoding=\"async\" width=\"1220\" height=\"450\" class=\"gb-image gb-image-b1f0b7cf\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2021-slides-north-america-potential.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2021-slides-north-america-potential.png 1220w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2021-slides-north-america-potential-300x111.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2021-slides-north-america-potential-1024x378.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2021-slides-north-america-potential-768x283.png 768w\" sizes=\"auto, (max-width: 1220px) 100vw, 1220px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>NAN\u2019s theoretical market size for North American high-level ultrasound disinfection is therefore 60,000*$3.44k = $206m.<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[Parker Labs website] \u201c<em>Our clinics switched from <\/em><strong><em>manual aldehydes<\/em><\/strong><em> to using Tristel ULT for [high-level disinfection] of our ultrasound probes.<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>The same testimonial noted the cost per disinfection using TSTL\u2019s foam was \u201c<em>approximately $3<\/em>\u201c.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>This H1 outlined the North American potential for a second FDA-approved foam for ophthalmology devices:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-097c2be2\"><img loading=\"lazy\" decoding=\"async\" width=\"1170\" height=\"590\" class=\"gb-image gb-image-097c2be2\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-06.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-06.png 1170w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-06-300x151.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-06-1024x516.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-06-768x387.png 768w\" sizes=\"auto, (max-width: 1170px) 100vw, 1170px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>An RNS the other week confirmed TSTL had submitted the FDA application for the ophthalmology foam and an FDA verdict should be forthcoming before the end of December.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The same RNS talked of the ophthalmology foam\u2019s \u201c<em>potential to transform<\/em>\u201d a North American market with up to 16 million procedures requiring a high-level disinfection:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[RNS September 2024] \u201c<strong><em>The Board believes that FDA clearance has the potential to transform ophthalmic disinfection practice in North America<\/em><\/strong><em>. According to the Spaulding classification, semi-critical devices require reprocessing with a HLD because they touch mucous membranes or non-intact skin, which is the case for nearly all ophthalmic devices. Very few semi-critical ophthalmic devices are subjected to an effective HLD in the US. Low-level disinfectant options such as alcohol wipes are used as an alternative, or devices may be soaked in sodium hypochlorite (bleach) or hydrogen peroxide in open trays with long contacts times<\/em>.<\/p>\n<p><strong><em>Tristel OPH is the only HLD in the world designed specifically for ophthalmic devices <\/em><\/strong><em>and if 510(k) filing is successful it would become the only FDA cleared HLD, effective with short contact times and no requirement to soak devices in chemicals in an open tray,<\/em><strong><em> available for use in the c. 16m ophthalmic procedures that require HLD annually in the US<\/em><\/strong><em>, such as glaucoma diagnosis and cataract surgeries.\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>To date, TSTL\u2019s ophthalmology foams have generated only a fraction of the revenue of ultrasound disinfectants within TSTL\u2019s established markets:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-e388253e\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"600\" class=\"gb-image gb-image-e388253e\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-01-ult-vs-oph.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-01-ult-vs-oph.png 1200w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-01-ult-vs-oph-300x150.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-01-ult-vs-oph-1024x512.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-01-ult-vs-oph-768x384.png 768w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>An FDA-approved ophthalmology foam may therefore enjoy only a fraction of the sales of the FDA-approved ultrasound foam in the US.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Last year TSTL suggested its third FDA regulatory submission would occur during FY 2026 and involve the foam that disinfects devices examining ears, noses and throats:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-501e4bc1\"><img loading=\"lazy\" decoding=\"async\" width=\"1110\" height=\"470\" class=\"gb-image gb-image-501e4bc1\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-FDA-2023-slides-north-america-timeline.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-FDA-2023-slides-north-america-timeline.png 1110w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-FDA-2023-slides-north-america-timeline-300x127.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-FDA-2023-slides-north-america-timeline-1024x434.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-FDA-2023-slides-north-america-timeline-768x325.png 768w\" sizes=\"auto, (max-width: 1110px) 100vw, 1110px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>\u00a0TSTL did not refer to US operating costs within this H1, but did say the group was \u201c<em>establishing a Boston office and transferring two of its senior business developers to North America\u201d.<\/em><\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The comparable H1 had predicted North American operating costs of \u00a3350k for FY 2024:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-9084cc36\"><img loading=\"lazy\" decoding=\"async\" width=\"1040\" height=\"350\" class=\"gb-image gb-image-9084cc36\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FDA-2023-slides07.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FDA-2023-slides07.png 1040w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FDA-2023-slides07-300x101.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FDA-2023-slides07-1024x345.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-FDA-2023-slides07-768x258.png 768w\" sizes=\"auto, (max-width: 1040px) 100vw, 1040px\"\/><\/figure>\n<figure class=\"gb-block-image gb-block-image-b6ba72c7\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-b6ba72c7\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart14.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart14.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart14-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Only time will tell how large the 24% royalties will be and whether that \u00a33.5m has been spent wisely.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>\u00a33.5m is equivalent to only 1.5% of the aggregate \u00a3231m revenue reported during the nine-year FDA application process, and will become a worthwhile investment should US sales really take off.\u00a0<\/li>\n<\/ul>\n<h2 class=\"gb-headline gb-headline-42525fbf gb-headline-text\" id=\"patents-competing-technologies\"><strong>Patents and competing technologies<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li>TSTL has regularly cited patents as part of the group\u2019s competitive advantage:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[AR 2023]<em><br \/>\u201c<\/em><strong><em>INTELLECTUAL PROPERTY PROTECTION<\/em><\/strong><em><br \/>On 30 June 2023, <\/em><strong><em>we held 142 patents granted in 32 countries providing legal protection for our products.<\/em><\/strong><em>\u00a0<\/em><\/p>\n<p><em>In its broadest sense, our intellectual property relates to: <\/em><br \/><strong><em>1. Patents<\/em><\/strong><em>, trademarks and registered designs <\/em><br \/><strong><em>2. <\/em><\/strong><em>The scientific validation of our chemistry and our products that have entered the public domain, via a number of peer-reviewed and published papers <\/em><br \/><strong><em>3. <\/em><\/strong><em>The certification by medical device manufacturers that our chemistry is compatible with their products. We enjoy official compatibility with the instrumentation of 56 medical device manufacturer, with respect to 1,449 of their individual models\u00a0<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s UK and EU patents protecting the group\u2019s Trio Wipes system expired after this H1.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/patents.google.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Google Patents<\/a> shows the expiry dates were:\n<ul class=\"wp-block-list\">\n<li>UK: 07 May 2024 (GB 241 3765), and;<\/li>\n<li>EU: 26 July 2024 (EP 174 2672).<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-c876ff33\"><img loading=\"lazy\" decoding=\"async\" width=\"1030\" height=\"460\" class=\"gb-image gb-image-c876ff33\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-patent-attorney-wipes-patents.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-patent-attorney-wipes-patents.png 1030w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-patent-attorney-wipes-patents-300x134.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-patent-attorney-wipes-patents-1024x457.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-patent-attorney-wipes-patents-768x343.png 768w\" sizes=\"auto, (max-width: 1030px) 100vw, 1030px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Google Patents shows the anticipated expiry dates of TSTL\u2019s foam patents to be:\n<ul class=\"wp-block-list\">\n<li>UK: 27 January 2026 (GB 242 2545);<\/li>\n<li>EU: 27 January 2026 (EP 184 3795), and;<\/li>\n<li>US: 11 September 2030 (US 884 0847).<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The <a href=\"https:\/\/maynardpaton.com\/2023\/08\/28\/tristel-record-81-gross-margin-supports-positive-h1-2023-as-fda-approval-creates-43m-disinfection-opportunity-alongside-management-ambition-to-double-revenue-over-the-medium-term\/#patents\">Q&amp;A during the 2023 open day<\/a> prompted extensive management remarks about patents and general intellectual-property protection, which concluded:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[Open day 2023] \u201c<em>Patents are quite important, but <\/em><strong><em>not at the top of the list of the protections<\/em><\/strong><em> we enjoy that help us with our competitive position<\/em>.\u201d<\/p>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s <a href=\"https:\/\/maynardpaton.com\/2024\/01\/14\/tristel-positive-fy-2023-reveals-revenue-up-22-new-5-plus-dividend-growth-policy-and-mooted-38p-royalty-per-us-ultrasound-disinfection\/#patents\">preceding FY webinar<\/a> repeated the same message, and confirmed the chemistry includes a \u201c<em>trade secret<\/em>\u201c:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[FY 2023] \u201c<em>Patenting is not the only IP protection that we have. <\/em><strong><em>The chemistry itself is protected by a trade secret within the formulation<\/em><\/strong><em>, something that only a handful of people have access to, and something that has never been reversed engineered.<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/maynardpaton.com\/2023\/01\/12\/tristel-pandemic-disrupted-fy-2022-reiterates-reassuring-10-15-year-sales-growth-ambition-as-us-regulatory-approval-now-relies-upon-fda-negotiation-over-product-batches\/#patents-chemistry\">My discussion with Bruce Green<\/a>, the chemist who devised TSTL\u2019s disinfectant chemistry, at the 2022 open day confirmed competitors were kept at bay through secret chemical ingredients and secret manufacturing processes.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Any impact from the aforementioned Trio Wipes patent expiries will be felt during FY 2025 and beyond.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>This H1 recapped three product enhancements and claimed a further 31 patent applications:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-70740952\"><img loading=\"lazy\" decoding=\"async\" width=\"1150\" height=\"570\" class=\"gb-image gb-image-70740952\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-07.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-07.png 1150w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-07-300x149.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-07-1024x508.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-slides-07-768x381.png 768w\" sizes=\"auto, (max-width: 1150px) 100vw, 1150px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>New text within the 2023 annual report (<a href=\"https:\/\/maynardpaton.com\/2024\/01\/14\/tristel-positive-fy-2023-reveals-revenue-up-22-new-5-plus-dividend-growth-policy-and-mooted-38p-royalty-per-us-ultrasound-disinfection\/#comment-13383\">point 12c<\/a>) did not suggest copycat disinfectants were a significant risk to TSTL. Instead the main three dangers were listed as:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[AR 2023]<br \/><em>\u201c\u2022 Competing technologies<\/em><br \/><em>\u2022 Divergence by regulators away from chemical disinfectant products<\/em><br \/><em>\u2022 A shift in market acceptance of manual decontamination systems<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>TSTL may not face equivalent competition from other wipes and foams, but \u201c<em><a href=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-PIIS0301562924001108.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">competing technologies<\/a><\/em>\u201d include:\n<ul class=\"wp-block-list\">\n<li>The aforementioned Trophon, which disinfects ultrasound probes using hydrogen peroxide, and;<\/li>\n<li><strong><a href=\"https:\/\/www.germitec.com\/en-us\" target=\"_blank\" rel=\"noreferrer noopener\">Germitec<\/a><\/strong>, <strong><a href=\"https:\/\/www.uvsmart.nl\/d45\" target=\"_blank\" rel=\"noreferrer noopener\">UV Smart<\/a><\/strong> and <strong><a href=\"https:\/\/lumicare.one\/\" target=\"_blank\" rel=\"noreferrer noopener\">Lumicare<\/a><\/strong>, which manufacture machines that disinfect ultrasound probes using ultraviolet (UV) light.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s H1 webinar appeared unconvinced about the decontamination qualities of UV light:\u00a0<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>[Chronos] is a UV-light box into which an ultrasound probe is placed. It\u2019s available in some of the markets in which we operate and it is a competitor. <\/em><strong><em>Is it an equivalent disinfection process? That\u2019s difficult to determine because there currently is not in place a standard evaluation methodology that\u2019s designed specifically for UV light.<\/em><\/strong><\/p>\n<p><em>As a consequence, Germitec, which produces the Chronos machine, <strong>h<\/strong><\/em><strong><em>as adapted a chemical-decontamination standard and modified it to carry out the testing on its Chronos machine<\/em><\/strong><em>. There\u2019s a big difference between using a chemical to decontaminate a device and using lights to decontaminate a device, and <\/em><strong><em>questions are being raised over whether the adaption Germitec has made to the standard is appropriate and whether customers can actually rely upon the data that has been created as a consequence<\/em><\/strong>.<\/p>\n<p><em>Light is a new technology, and the market needs to catch up and <\/em><strong><em>the regulators need to catch up<\/em><\/strong><em> and put in place a form of assessing its effectiveness. Certainly Chronos is a competitor. Is it an equivalent? <\/em><strong><em>We have to wait until there\u2019s proper data to demonstrate that its performance really is equivalent to chemical decontamination<\/em>\u201c<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>The regulators \u2014 at least in the US \u2014 do not share TSTL\u2019s scepticism of UV light\u2026<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-61f3bd3b\"><img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"532\" class=\"gb-image gb-image-61f3bd3b\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-germitec-usa.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-germitec-usa.png 800w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-germitec-usa-300x200.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-germitec-usa-768x511.png 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>TSTL will therefore compete with Trophon <em><span style=\"text-decoration: underline;\">and<\/span><\/em> Chronos in the US.<\/li>\n<\/ul>\n<div class=\"gb-container gb-container-6de1795c\">\n<div class=\"gb-inside-container\">\n<figure class=\"wp-block-embed is-type-video is-provider-vimeo wp-block-embed-vimeo wp-embed-aspect-16-9 wp-has-aspect-ratio\">\n<p>\n<iframe loading=\"lazy\" title=\"Chronos delivers a fast, simple, clean solution for seamless ultrasound probe disinfection\" src=\"https:\/\/player.vimeo.com\/video\/877315241?dnt=1&amp;app_id=122963\" width=\"825\" height=\"464\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write\"><\/iframe>\n<\/p>\n<\/figure>\n<\/div>\n<\/div>\n<ul class=\"wp-block-list\">\n<li>Perhaps the development of new UV-light decontamination devices will amplify those other new TSTL risks:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[AR 2023]<br \/>\u201c<em>\u2022 Divergence by regulators away from chemical disinfectant products<\/em><br \/><em>\u2022 A shift in market acceptance of manual decontamination systems<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>NAN for instance has discredited manual disinfection to help promote its latest CORIS machine:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-9acb554e\"><img loading=\"lazy\" decoding=\"async\" width=\"1150\" height=\"580\" class=\"gb-image gb-image-9acb554e\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2024-slides-vs-manual1.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2024-slides-vs-manual1.png 1150w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2024-slides-vs-manual1-300x151.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2024-slides-vs-manual1-1024x516.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2024-slides-vs-manual1-768x387.png 768w\" sizes=\"auto, (max-width: 1150px) 100vw, 1150px\"\/><\/figure>\n<figure class=\"gb-block-image gb-block-image-902823ee\"><img loading=\"lazy\" decoding=\"async\" width=\"1170\" height=\"590\" class=\"gb-image gb-image-902823ee\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2024-slides-vs-manual2.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2024-slides-vs-manual2.png 1170w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2024-slides-vs-manual2-300x151.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2024-slides-vs-manual2-1024x516.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-NAN-FY-2024-slides-vs-manual2-768x387.png 768w\" sizes=\"auto, (max-width: 1170px) 100vw, 1170px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>The aforementioned testimonial from the US urologist now using TSTL\u2019s foam contained a very limited argument for manual cleaning over automated cleaning:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[Parker Labs website]<br \/>\u201c<strong><em>A CHOICE OF MANUAL VS. AUTOMATED HIGH-LEVEL DISINFECTION<\/em><\/strong><br \/><em>When choosing between manual and automated HLD options, there is often concern manual disinfection is less effective, highly variable, and inherently more prone to human error. <\/em><strong><em>However, no studies have demonstrated manual application of Tristel ULT is less effective than automated systems.<\/em><\/strong><em> FDA clearance indicates the Tristel ULT is considered safe and effective for achieving HLD of ultrasound probes, eliminating this concern.<\/em>\u201d\u00a0<\/p>\n<h2 class=\"gb-headline gb-headline-7f93394e gb-headline-text\" id=\"boardroom\"><strong>Boardroom<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li>December\u2019s AGM announced the retirement of TSTL\u2019s chief executive:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[RNS December 2023] <br \/>\u201c<strong><em>Paul Swinney, co-founder of the business in 1993 and Group CEO for the past thirty years, has informed the Board of his intention to retire<\/em><\/strong><em> within the next twelve months. Paul will continue in his post until a successor is appointed and has committed to remain available thereafter to support and advise the business in executing a successful transition in the leadership of the Group. The Board has, therefore, initiated a formal succession process, supported by the global organisational consulting firm The Coulter Partnership, that will consider both external and internal candidates.<\/em><\/p>\n<p><em>The Group\u2019s new CEO will join a strong executive leadership team with significant functional and market experience, gained from within and outside the business.\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>This H1 supplied a short update on the matter:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<strong><em>CEO succession<br \/><\/em><\/strong><em>At the time of our AGM in December, Paul Swinney, the Company\u2019s founder and CEO of 30 years, announced his plans to retire in 2024 following a successful transition of leadership. A competitive selection programme is currently underway.<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>During management\u2019s H1 webinar, TSTL\u2019s PR handler frustratingly refused to raise shareholders\u2019 questions about the chief executive\u2019s retirement (\u201c<em>I shouldn\u2019t be putting Paul on the spot to give reasons<\/em>\u201c).<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>TSTL did not hold its usual open day during July, which also prevented shareholders asking questions about the chief executive\u2019s retirement.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Why the chief executive retired just as TSTL stands on the cusp of great progress in the States therefore remains a mystery.\u00a0<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[ADVFN July 2024] <br \/>\u201c<em><strong>I was at the Tristel AGM last December<\/strong> and spoke to both Paul Swinney and Liz Dixon about Paul\u2019s retirement decision, plus various other things. There was not the slightest hint that it was illness related and he looked in pretty good nick.<\/em><\/p>\n<p><strong><em>I think that the demands and stresses placed on a CEO at a fast growing company are sometimes underestimated. <\/em><\/strong><em>Those demands are certain to grow now that the US\/Canadian business is taking off and the company is expanding in other parts of the world. <\/em><strong><em>I can understand why Paul is happy to go out on a high<\/em><\/strong><em>.<\/em>\u201c<\/p>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s former chief executive and current finance director are married (<a href=\"https:\/\/maynardpaton.com\/2024\/01\/14\/tristel-positive-fy-2023-reveals-revenue-up-22-new-5-plus-dividend-growth-policy-and-mooted-38p-royalty-per-us-ultrasound-disinfection\/#comment-13383\">point 12f<\/a>), have been selling shares (<a href=\"https:\/\/maynardpaton.com\/2024\/01\/14\/tristel-positive-fy-2023-reveals-revenue-up-22-new-5-plus-dividend-growth-policy-and-mooted-38p-royalty-per-us-ultrasound-disinfection\/#comment-13383\">point 10e<\/a>) and are probably both now thinking of life beyond TSTL:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-48594ae9\"><a href=\"https:\/\/maynardpaton.com\/sharepad\/\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" decoding=\"async\" width=\"1030\" height=\"280\" class=\"gb-image gb-image-48594ae9\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-sharepad-director-sales.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-sharepad-director-sales.png 1030w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-sharepad-director-sales-300x82.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-sharepad-director-sales-1024x278.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-sharepad-director-sales-768x209.png 768w\" sizes=\"auto, (max-width: 1030px) 100vw, 1030px\"\/><\/a><figcaption class=\"gb-headline gb-headline-8a0b9a32 gb-headline-text\"><em><sub>(Source: <a href=\"https:\/\/maynardpaton.com\/sharepad\/\" target=\"_blank\" rel=\"noreferrer noopener\">SharePad<\/a>)<\/sub><\/em><\/figcaption><\/figure>\n<ul class=\"wp-block-list\">\n<li>Matthew Sassone started as TSTL chief executive last month:\u00a0<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[RNS June 2024] \u201c<em>Tristel plc (AIM: TSTL), the manufacturer of infection prevention products, <\/em><strong><em>announces the appointment of Matthew (\u201cMatt\u201d) Sassone as Chief Executive Officer<\/em><\/strong><em> (\u201cCEO\u201d) and to the Tristel Board, <\/em><strong><em>with effect from 2 September 2024<\/em><\/strong><em>.\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>On paper at least, Mr Sassone ticks a lot of boxes for marketing healthcare products in the US:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>Matt joins Tristel from <\/em><strong><em>Masimo Corporation (NASDAQ: MASI), a global medical technology company, where he is Senior Vice-President Marketing<\/em><\/strong><em>. During his tenure at Masimo, <\/em><strong><em>Matt lived and worked in the USA<\/em><\/strong><em>, gaining invaluable experience in the American healthcare market. <\/em><strong><em>He has over 27 years\u2019 experience in the medical industry<\/em><\/strong><em> in various sales, marketing, business development and senior management roles. <\/em><strong><em>He joined the Board of AIM-listed cardiovascular monitoring company, LiDCO Group Plc<\/em><\/strong><em> (\u201cLiDCO\u201d), in June 2015, <\/em><strong><em>becoming CEO<\/em><\/strong><em> in August 2015. LiDCO was bought for \u00a331m by Masimo in February 2021.<\/em><\/p>\n<p><em>Matt started his career in sales for Quintiles in 1996. He spent 12 years at Smiths Medical in various sales, marketing and business development roles achieving t<\/em><strong><em>he role of Managing Director, Northern and Eastern Europe and Russia in 2010 where he had full P&amp;L responsibility for 300 employees and \u00a3150m of revenue.<\/em><\/strong><em> In 2012 he moved to ArjoHuntleigh, a division of the Getinge Group, as S<\/em><strong><em>enior Vice President Global Marketing and was Chief Marketing Officer of Maquet (turnover \u00a31.1 billion in intensive care, surgery and anaesthesia systems)<\/em><\/strong><em>, also a division of Getinge. Matt has <\/em><strong><em>a degree in biochemistry with microbiology,<\/em><\/strong><em> a diploma in management studies and a CIM diploma.\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Mr Sassone\u2019s stint at AIM-quoted LiDCO \u2014 a manufacturer of blood-flow monitors for operating theatres and intensive care units \u2014 was not sparkling for shareholders.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Between Mr Sassone\u2019s appointment as LiDCO chief executive during August 2015 and the announcement of the recommended offer for LiDCO during November 2020:\n<ul class=\"wp-block-list\">\n<li>Annual revenue bobbed between \u00a37m and \u00a38m;<\/li>\n<li>Adjusted losses were recorded during FYs 2016, 2018, 2019 and 2020;<\/li>\n<li>An adjusted \u00a360k profit was recorded for FY 2017, and;<\/li>\n<li>The shares started at 10p, fell to less than 4p, recovered to 6p before being acquired at 12p:\u00a0<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>During his LiDCO leadership, Mr Sassone spent only \u00a315k to buy 250,000 LiDCO shares at 6p during an FY 2016 placing:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-813bb30d\"><img loading=\"lazy\" decoding=\"async\" width=\"1100\" height=\"400\" class=\"gb-image gb-image-813bb30d\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Lidco-AR-2020-shares.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Lidco-AR-2020-shares.png 1100w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Lidco-AR-2020-shares-300x109.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Lidco-AR-2020-shares-1024x372.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Lidco-AR-2020-shares-768x279.png 768w\" sizes=\"auto, (max-width: 1100px) 100vw, 1100px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>But by FY 2020 Mr Sassone had also amassed 9.6 million LiDCO options:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-97cc229e\"><img loading=\"lazy\" decoding=\"async\" width=\"1100\" height=\"420\" class=\"gb-image gb-image-97cc229e\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Lidco-AR-2020-options.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Lidco-AR-2020-options.png 1100w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Lidco-AR-2020-options-300x115.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Lidco-AR-2020-options-1024x391.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Lidco-AR-2020-options-768x293.png 768w\" sizes=\"auto, (max-width: 1100px) 100vw, 1100px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>I must confess Mr Sassone\u2019s talent for creating long-term shareholder value is not clear from LiDCO or the rest of his CV \u2014 although his willingness to sell LiDCO to a large US business is encouraging for TSTL investors.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>I would like to think TSTL\u2019s established competitive position \u2014 underlined by the aforementioned significant presence of TSTL products within UK hospitals \u2014 means Mr Sassone does not have to work miracles for TSTL to prosper.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>I trust Mr Sassone will then:\n<ul class=\"wp-block-list\">\n<li>Outline his strategic ambitions for the group;<\/li>\n<li>Reveal new three-year revenue growth and Ebitda-margin targets, and;<\/li>\n<li>Reiterate the policy to lift the annual dividend by a minimum 5% every year.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s previous chief executive set expectations high during the 2023 open day after presenting an ambition of \u201c<em>doubling revenue over the medium term<\/em>\u201c:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-5853b4dc\"><img loading=\"lazy\" decoding=\"async\" width=\"1030\" height=\"560\" class=\"gb-image gb-image-5853b4dc\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Open-Day-2023-slides05.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Open-Day-2023-slides05.png 1030w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Open-Day-2023-slides05-300x163.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Open-Day-2023-slides05-1024x557.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Open-Day-2023-slides05-768x418.png 768w\" sizes=\"auto, (max-width: 1030px) 100vw, 1030px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Coinciding with the appointment of Mr Sassone, Bart Leemans \u2014 the former owner of the Belgian, Dutch and French distributors \u2014 has stepped down from the board but remains employed as MD of TSTL\u2019s impressive French subsidiary.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Mr Leemans sold his distributorships to TSTL during FY 2019 and took c950k TSTL shares (2%) as part payment \u2014 and has commendably never sold a share since (<a href=\"https:\/\/maynardpaton.com\/2024\/01\/14\/tristel-positive-fy-2023-reveals-revenue-up-22-new-5-plus-dividend-growth-policy-and-mooted-38p-royalty-per-us-ultrasound-disinfection\/#comment-13383\">point 10e<\/a>).<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>As far as I am aware, during his time as a board executive, Mr Leemans has appeared at only one of TSTL\u2019s six HQ open days and has never attended a private-investor presentation. I get the (welcome) impression Mr Leemans prioritises talking to customers over talking to shareholders.<\/li>\n<\/ul>\n<h2 class=\"gb-headline gb-headline-bbbe9801 gb-headline-text\" id=\"share-options\"><strong>Share options<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li>Significant share-based payments have featured regularly within TSTL\u2019s accounts.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Between FYs 2016 and 2023, share-based payments reduced the aggregate pre-exceptional operating profit by \u00a35.2m, or 13%:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-40370f31\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-40370f31\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart14.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart14.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart14-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>This H1 witnessed share-based payments reduce operating profit by \u00a3691k, or 17%:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-fa83162e\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-fa83162e\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart03.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart03.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart03-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>TSTL presents an adjusted profit excluding share-based payments:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>The Board believes that these share schemes help to retain staff and link their interests to shareholders. The value of share-based payments is significantly influenced by the volatility of the Company\u2019s share price, a factor that is out of the Board\u2019s control. As consequence, <\/em><strong><em>profit and earnings are reported on both an adjusted basis, adding back share-based payments, alongside unadjusted, so that the underlying profitability of the Company can be understood<\/em><\/strong><em>.\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>One reason for adjusting for share-based payments is such charges can occur despite the options eventually becoming worthless.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>This H1 revealed an executive LTIP incurred a \u00a30.2m cost:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>The share-based payment charge of \u00a30.7m is derived from the Group\u2019s All-Staff share option scheme which is based upon periodic share option grants to staff members (\u00a30.5m), <\/em><strong><em>and the Executive Management LTIP scheme (\u00a30.2m)<\/em><\/strong><em>.\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-AGM-2020-LTIP-2021-2024.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">The LTIP in question<\/a> relates to 800k options that pay out if profit (before share-based payments!) reached \u00a310m during FY 2024 or the share price traded at a c600p average during April\/May\/June 2024:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-23d7a90d\"><img loading=\"lazy\" decoding=\"async\" width=\"1030\" height=\"480\" class=\"gb-image gb-image-23d7a90d\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-2021-option-plan.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-2021-option-plan.png 1030w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-2021-option-plan-300x140.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-2021-option-plan-1024x477.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-2021-option-plan-768x358.png 768w\" sizes=\"auto, (max-width: 1030px) 100vw, 1030px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>The 800k options have now expired worthless, as:\n<ul class=\"wp-block-list\">\n<li>A post-H1 update (<a href=\"#valuation\">see Valuation<\/a>) confirmed FY 2024 profit did not reach \u00a310m, and;<\/li>\n<li>The share price did not trade anywhere near 600p during April\/May\/June 2024.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The true long-term cost of options to ordinary shareholders is through permanent dilution and not accounting charges.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s share count has advanced 14% between the start of FY 2016 and the end of the preceding FY, with 12% due to options and 2% due to the purchase of the Belgian\/Dutch\/French distributor (<a href=\"#boardroom\">see Boardroom<\/a>):<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>During the same period, the share price increased from 101p to 425p while the dividend increased from 2.72p to 10.5p per share. Outside shareholders were therefore still rewarded despite the dilution. \u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>I presume TSTL\u2019s board is currently devising a new scheme to replace the now worthless LTIP.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>LTIP features for the remuneration committee to consider are:\n<ul class=\"wp-block-list\">\n<li>The demands of the new chief executive, who may require more than the 500,000 options the previous chief executive received;<\/li>\n<li>The LTIP\u2019s financial targets (previously profit and share price), and whether they match the financial targets announced to shareholders (currently revenue growth and Ebitda margin), and;<\/li>\n<li>Whether the new LTIP will contravene the best practice of limiting option grants to 10% of the share count over ten years.\u00a0<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>On that final point, TSTL granted 6.9 million options during the ten years to the preceding FY\u2026<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-842be26f\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"399\" class=\"gb-image gb-image-842be26f\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart16.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart16.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart16-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>\u2026which is equivalent to 17% of the share count at the start of that ten-year period (40 million).\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Following the 800k-option LTIP becoming worthless, I calculate TSTL now has 1,442k options outstanding equating to potential further dilution of 3.0%.<\/li>\n<\/ul>\n<h2 class=\"gb-headline gb-headline-17c2de65 gb-headline-text\" id=\"financials-margin-employees\"><strong>Financials: margin and employees<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li>A financial highlight from this H1 was the gross margin reaching a record 84%:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-840e7314\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-840e7314\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart16.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart16.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart16-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>An 84% gross margin is equivalent to buying stock for \u00a316 and selling it for \u00a3100, and underlines how TSTL\u2019s customers value the effectiveness of the group\u2019s disinfection chemistry.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The medical-device wipes and foams boasted an 87% gross margin during this H1:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-71590d80\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-71590d80\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart15.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart15.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart15-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>The 61% gross margin earned from the hospital-surface disinfectants remains relatively unimpressive, and suggests the new TANK product is needed to shore up that division\u2019s profitability.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s H1 webinar revealed the higher gross margin was due to price increases:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>Within the six months there were price increases, which benefited revenue and <\/em><strong><em>benefited gross margins equally<\/em><\/strong><em>. We keep ahead of inflationary cost increases and non-inflationary cost increases.<\/em><strong><em>\u201c<\/em><\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>Management\u2019s H1 webinar also claimed gross margin reaching 90% was not within the group\u2019s forecast.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The 84% gross margin helped TSTL surpass its Ebitda target, which the preceding FY reiterated was at least 25%:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[AR 2023]<strong><em><br \/>\u201c1. <\/em><\/strong><em>Sales growth in the range of 10% to 15% per annum as an annual average over the three years<br \/><\/em><strong><em>2. The achievement in each year of an EBITDA margin (excluding share-based payment charge) of at least 25%, and<\/em><\/strong><br \/><strong><em>3. <\/em><\/strong><em>To increase profit before tax (excluding share-based payments) year-on-year, independently of the other two targets\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>This H1\u2019s Ebitda (before share-based payments) was \u00a35.4m to give an Ebitda margin of 26.0%:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-9d70ab53\"><img loading=\"lazy\" decoding=\"async\" width=\"1010\" height=\"550\" class=\"gb-image gb-image-9d70ab53\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-ebitda.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-ebitda.png 1010w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-ebitda-300x163.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-ebitda-768x418.png 768w\" sizes=\"auto, (max-width: 1010px) 100vw, 1010px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>The H1 operating margin excluding share-based payments was a useful 19% versus 18% during the comparable H1:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-28f9db86\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-28f9db86\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart17.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart17.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart17-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>The record 84% gross margin ensured this H1\u2019s operating margin excluding share-based payments could improve to 19% despite expenses increasing by 27%:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">\u201c<em>Sales, general and administrative expenses were \u00a311.9m (2022: \u00a39.5m), a <\/em><strong><em>27% increase<\/em><\/strong><em>. This cost growth is due to a combination of inflationary increases and <\/em><strong><em>the recruitment of an additional 27 staff into our sales, marketing and distribution areas<\/em><\/strong><em>. We implemented<\/em><strong><em> pay increases during 2023 to ensure our pay rates remain competitive and to secure staff retention<\/em><\/strong><em>. \u201c<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>The recruitment of 27 staff within sales, marketing and distribution is very notable given those departments employed an average of 90 people during the preceding FY:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-1863dacf\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-1863dacf\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart18.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart18.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart18-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Recent years have witnessed TSTL\u2019s workforce productivity stagnate; for example, revenue per employee for the preceding FY matched that of FY 2016:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-f308ba83\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-f308ba83\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart21.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart21.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart21-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Revenue per employee not advancing is disappointing, especially as the proportion of the workforce employed within sales, marketing and distribution represented 42% of the headcount during the preceding FY versus\u00a033% during FY 2016.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>But management\u2019s H1 webinar did offer the prospect of workforce productivity improving\u2026 assuming the sales team could sell surface disinfectants in much greater volume:<\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\"><em>\u201cThe economy of scale that is available to us is that <\/em><strong><em>we aren\u2019t creating a second salesforce to represent the Cache products<\/em><\/strong><em> within the hospital marketplace. They sell to the infection-prevention community worldwide and represent the Tristel product range to that community and <\/em><strong><em>now they can talk to the infection preventionists about surface disinfection<\/em><\/strong><em> as well with the same chemistry\u2026 So, <\/em><strong><em>double sales on the same cost base<\/em><\/strong><em> as is represented by that salesforce and that\u2019s one very significant economy of scale\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Flat-lining revenue per employee is not ideal when staff costs are increasing.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Staff costs are TSTL\u2019s largest expense, representing 35% of revenue during the preceding FY versus 30% or less between FYs 2014 and 2019:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-4d15763c\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-4d15763c\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart20.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart20.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/01\/TSTL-FY-2023-chart20-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>I am not convinced a higher gross margin will always be able to offset higher employee expenses if revenue per head does not improve.<\/li>\n<\/ul>\n<h2 class=\"gb-headline gb-headline-88f49875 gb-headline-text\" id=\"financials-balance-sheet-cash-flow\"><strong>Financials: balance sheet and cash flow<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li>The aforementioned \u00a310.8m cash position included \u00a36.0m cash deemed as \u201c<em>short-term investments<\/em>\u201d held within term-deposit accounts:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-7d777aed\"><img loading=\"lazy\" decoding=\"async\" width=\"770\" height=\"520\" class=\"gb-image gb-image-7d777aed\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-assets.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-assets.png 770w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-assets-300x203.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-assets-768x519.png 768w\" sizes=\"auto, (max-width: 770px) 100vw, 770px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>Interest earned on the \u00a310m or so held throughout this H1 was \u00a3125k, which suggests a c2.5% annual interest rate:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-a78f57b2\"><img loading=\"lazy\" decoding=\"async\" width=\"1010\" height=\"360\" class=\"gb-image gb-image-a78f57b2\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-interest.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-interest.png 1010w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-interest-300x107.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-interest-768x274.png 768w\" sizes=\"auto, (max-width: 1010px) 100vw, 1010px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>\u00a3125k earned on the \u00a36m held within term-deposit accounts suggests a useful 4% rate assuming the \u00a34m balance collected no interest.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s accounts remain free of debt and H1 cash of \u00a310.8m is equivalent to 27% of trailing twelve-month revenue of \u00a339.5m:<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-5ad5f983\"><img loading=\"lazy\" decoding=\"async\" width=\"700\" height=\"400\" class=\"gb-image gb-image-5ad5f983\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart19.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart19.png 700w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-spreadsheet-chart19-300x171.png 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>TSTL declared special dividends during FYs 2015, 2016 and 2022 when net cash reached approximately 30% of revenue.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>A post-H1 update revealed cash finishing FY 2024 at \u00a311.6m \u2014 equivalent to nearly 28% of FY 2024 revenue of \u00a341.9m (<a href=\"#valuation\">see Valuation<\/a>).\u00a0 \u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Cash flow was very respectable during this H1, with adjusted earnings of \u00a34.1m translating favourably into free cash of \u00a34.6m.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Welcome cash movements during this H1 included:\n<ul class=\"wp-block-list\">\n<li>Cash capex of just \u00a3518k versus depreciation and amortisation of \u00a3860k charged to the income statement;<\/li>\n<li>A working-capital investment of only \u00a3156k, and;<\/li>\n<li>A net \u00a3181k tax refund:<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-02241796\"><img loading=\"lazy\" decoding=\"async\" width=\"770\" height=\"770\" class=\"gb-image gb-image-02241796\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-cash-flow.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-cash-flow.png 770w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-cash-flow-300x300.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-cash-flow-150x150.png 150w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-cash-flow-768x768.png 768w\" sizes=\"auto, (max-width: 770px) 100vw, 770px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s balance sheet still implies the business remains an inherently capital-light operation.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Net assets of \u00a331m less goodwill (\u00a35m) and cash (\u00a311m) leaves \u00a315m, represented mostly by working capital (\u00a37m), various intangibles (\u00a35m) and property, plant and equipment (\u00a33m): \u00a0<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-71a83f57\"><img loading=\"lazy\" decoding=\"async\" width=\"770\" height=\"770\" class=\"gb-image gb-image-71a83f57\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-balance-sheet.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-balance-sheet.png 770w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-balance-sheet-300x300.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-balance-sheet-150x150.png 150w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-results-balance-sheet-768x768.png 768w\" sizes=\"auto, (max-width: 770px) 100vw, 770px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>That \u00a315m compares to an FY 2024 pre-tax profit (before share-based payments) of at least \u00a38m (<a href=\"#valuation\">see Valuation<\/a>), and implies TSTL may not need to reinvest significant amounts within the business to advance profit further.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>TSTL carries no final-salary pension obligations.<\/li>\n<\/ul>\n<h2 class=\"gb-headline gb-headline-95fcf419 gb-headline-text\" id=\"valuation\"><strong>Valuation<\/strong><\/h2>\n<ul class=\"wp-block-list\">\n<li>A post-H1 update during July summarised \u201c<em>a strong trading performance ahead of market expectations and the Company\u2019s own performance targets\u201d:<\/em><\/li>\n<\/ul>\n<p class=\"has-global-color-8-background-color has-background\">[RNS July 2024]<br \/><em>\u201c\u2022 <\/em><strong><em>Revenues for the year were up 16.4% to \u00a341.9m<\/em><\/strong><em> (FY 2023: \u00a336.0m), ahead of market expectations and above the Company\u2019s performance target for revenue growth (an annual average of 10-15% over three years).<\/em><\/p>\n<p><em>\u2022 <\/em><strong><em>Adjusted profit before tax* will be no less than \u00a38.0m, ahead of market expectations and 29% ahead<\/em><\/strong><em> of last year (FY 2023: \u00a36.2m).<\/em><\/p>\n<p><em>\u2022 Tristel continues to be debt free and cash generative. <\/em><strong><em>Cash balances on 30 June 2024 were \u00a311.6m<\/em><\/strong><em> (30 June 2023: \u00a39.5m).\u201d<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>H2 2024 revenue was therefore \u00a321m \u2014 up 13% on H2 2023.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>If the 12% average price increase enjoyed during this H1 was experienced during H2 2024, then perhaps H2 2024 experienced only 1% volume growth.\u00a0<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>H2 revenue of \u00a321m matched this H1\u2019s revenue, as indeed did the H2 pre-tax profit before share payments of \u00a34m match this H1\u2019s pre-tax profit before share payments.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>FY 2024 cash up by \u00a32.1m to \u00a311.6m implies cash generation during FY 2024 was \u00a38.7m after adding back \u00a36.2m paid as dividends (13.1p*c47.6 million shares).\n<ul class=\"wp-block-list\">\n<li>Note: \u00a36.2m paid as dividends equates to approximately 70% of that \u00a38.7m cash generation, indicating TSTL is commendably returning a significant proportion of cash flow back to shareholders.\u00a0<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The predicted pre-tax profit (before share payments) of \u00a38m less standard 25% UK tax gives possible FY 2024 earnings of \u00a36m or 12.6p per share.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The 400p shares trade at 32x that 12.6p earnings calculation.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>Assume the new chief executive does indeed keep his predecessor\u2019s ambition of \u201c<em>doubling revenue over the medium term<\/em>\u201c\u2026<\/li>\n<\/ul>\n<figure class=\"gb-block-image gb-block-image-1d06339f\"><img loading=\"lazy\" decoding=\"async\" width=\"1030\" height=\"560\" class=\"gb-image gb-image-1d06339f\" src=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Open-Day-2023-slides05.png\" alt=\"\" srcset=\"https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Open-Day-2023-slides05.png 1030w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Open-Day-2023-slides05-300x163.png 300w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Open-Day-2023-slides05-1024x557.png 1024w, https:\/\/maynardpaton.com\/wp-content\/uploads\/2024\/09\/TSTL-H1-2024-Open-Day-2023-slides05-768x418.png 768w\" sizes=\"auto, (max-width: 1030px) 100vw, 1030px\"\/><\/figure>\n<ul class=\"wp-block-list\">\n<li>\u2026 then perhaps FY 2029 might witness earnings double that 12.6p estimate at 25p per share.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>My valuation sums could be fine-tuned for margin improvements, lease costs, the cash position, option dilution and tax intricacies, but the 400p share price at 16x this 25p per share estimate \u2014 for FY 2029! \u2014 does not indicate an obvious bargain.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>TSTL\u2019s elevated rating assumes:\n<ul class=\"wp-block-list\">\n<li>Very lucrative US royalties and significant progress within other new territories;<\/li>\n<li>Further meaningful growth from established products within established markets;<\/li>\n<li>Ongoing pricing power over customers (even the NHS), underpinned by a durable competitive advantage through secret chemistries;<\/li>\n<li>Attractive returns from TANK and other R&amp;D projects. and;<\/li>\n<li>Stronger business acumen following the appointment of the new chief executive.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>But TSTL\u2019s elevated rating may be overlooking:\n<ul class=\"wp-block-list\">\n<li>Enhanced competition from (now FDA-approved!) UV-disinfection machines, and a greater industry acceptance of automated disinfection generally;<\/li>\n<li>The unexplained retirement of the previous chief executive despite saying TSTL\u2019s current prospects were the strongest for 30 years;<\/li>\n<li>Recent growth being supported mostly by price increases rather than higher volumes;<\/li>\n<li>Expansion in the US proving slow due to protracted customer \u201c<em>beta testing<\/em>\u201c, and;<\/li>\n<li>Weaker business acumen following the appointment of the new chief executive.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>As shareholders prepare to judge the new chief exec, the trailing 13.1p per share ordinary dividend supports a 3.3% income at 400p.\u00a0<\/li>\n<\/ul>\n<p><strong>Maynard Paton<\/strong><\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>01 October 2024By Maynard Paton H1 2024 results summary for Tristel (TSTL): A record H1, displaying revenue up 20%, profit up 28% and the dividend up 100% underpinned by remarkable 30% UK growth and notable price increases accepted by the NHS. North America is now deemed a \u201c$100m per annum opportunity\u201d for TSTL\u2019s initial FDA-approved [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[96],"tags":[1373,2708,5829,91933,1376,3576,10976,27828,10912,46142,3426,2196,107293,22287,31178,843,16186,57651,5995,14715,83605],"dealstore":[],"offerexpiration":[],"class_list":["post-278803","post","type-post","status-publish","format-standard","hentry","category-investing","tag-100m","tag-america","tag-announces","tag-awaited","tag-bumper","tag-chief","tag-dividend","tag-execs","tag-financial","tag-gross","tag-growth","tag-jump","tag-keenly","tag-margin","tag-maynard","tag-north","tag-opportunity","tag-paton","tag-record","tag-targets","tag-tristel"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Maynard Paton | TRISTEL: New Chief Exec\u2019s Financial Targets Keenly Awaited After Record H1 2024 Announces 30% UK Growth, 100% Dividend Jump, Bumper 84% Gross Margin And \u2018$100m Opportunity\u2019 In North America - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=278803\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Maynard Paton | TRISTEL: New Chief Exec\u2019s Financial Targets Keenly Awaited After Record H1 2024 Announces 30% UK Growth, 100% Dividend Jump, Bumper 84% Gross Margin And \u2018$100m Opportunity\u2019 In North America - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"01 October 2024By Maynard Paton H1 2024 results summary for Tristel (TSTL): A record H1, displaying revenue up 20%, profit up 28% and the dividend up 100% underpinned by remarkable 30% UK growth and notable price increases accepted by the NHS. 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