14th Oct 2013 12:51
LONDON (Alliance News) - Tristel PLC saw its share value rise as much as 13% Monday morning, despite lowering its final dividend as it posted decreased revenues and widened pretax losses in the year ended June 30 after restructured to tackle declines in its legacy business.
The specialist hygiene products and contamination control company proposed a final dividend of 0.32 pence, bringing the total dividend for the year to 0.40 pence, down from 0.62 pence in the previous year.
The company posted revenues of GBP10.6 million, down from GBP10.9 million in the previous year. It saw a pretax loss of GBP1.8 million, widened from GBP583,000 in the previous year. The company attributed widened losses to non-cash exceptional charges of GBP2.2 million arising from restructuring in China and reviews of the company's IP portfolio.
Finance Director Liz Dixon told Alliance News that this was due to the company's business model in China, which is "to sell via a distributor network."
"It transpired that those we had signed up were low quality and weren't getting the business we needed," Dixon explained, "So we culled about half of the distributors."
Effectively the company started from scratch in China, Dixon said, but is now working alongside the right distributors.
The company carried out a restructuring of its engineering function for GBP119,583 as a provision against slow moving inventory and redundancy costs. Multi-channel endoscopy products, Tristel's legacy business, saw share declines which dominated the company's financial results.
The company said that sales more than halved during 2013. These products comprised of chemical disinfectants used in washing machines, however over the last few years "the machine manufacturers designed their own range of chemistry to be used in the own machines," said Dixon. "The rapid decline in the first half was just a continuation of what's been happening in the previous years."
However, new instrument decontamination standards were released in the summer of 2012, Dixon said, and when those standards were finalised "it pulled the trigger on the changes, the swap out of machines, which resulted in the more rapid decline which we saw in this financial year."
Restructuring during declines in the company's core product area has been difficult, Tristel said, but it was necessary for Tristel to succeed in a changing market environment. Despite these difficulties, the company's transition out of the sale of these products has been something of a relief for Tristel.
"The difficulty we've faced is knowing we would lose the endoscopy business," Dixon said, "and not knowing when and how the decline would occur. Now it's happened its de-risked the business, and we can focus on the changes we've made."
Although the company had seen a poor performance in the first-half of the year, the second-half improved due to cost cutting measures and growth in Tristel's newer products such as its non and single-lumed instrument disinfectant products.
Tristel has a series of hand sanitizers patented which it has not yet commercialised, but Chief Executive Officer Paul Swinney told Alliance News that they had been left on the back burner until other issues were resolved. "We feel very strongly that its technology that's innovative and needs to find its way to market," said Swinney.
The company said that it was cautiously optimistic for the coming year following short-term restructuring. "With all of our overseas operations cash flow positive and with an improved cost structure we believe we can manage the final stage of the decline in legacy products and drive our company to achieve the levels of growth and profitability that the board expects and our shareholders deserve," said Chairman Christopher Samler in a statement.
Going forward Dixon said that the company has "no acquisition plans, no plans for any further major diversification, we may take on some more distributors but we have no plans for major investment."
"We're going to keep on doing what we've spent the last nine months doing," said Dixon, "see profits grow, see revenues grow and focus on paying a decent dividend."
Shares in Tristel increased 8.3% Monday afternoon at 26.00 pence, having previously risen 13% to 27.10 pence Monday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
Copyright 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
Tristel