Tristel (LSE:TSTL) — Interim Results for the six months to 31 December 2023

0:01 Good morning, and welcome to the TRISTEL PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Liz Dixon, CFO. Good morning. Good morning, everybody. Good to see you, and, welcome to TRISTEL PLC's interim results for the six months to 12/31/2023. So those of you who are not familiar with the business, our company is an infection prevention company.

0:51 We focus upon the hospital, and, we have a unique proposition, a unique chemistry, chlorine dioxide that, has a a specific formulation that's proprietary to

1:03 us, which is woven into all of our products to produce, two outcomes within two areas of the hospital under two separate brands. The first is our TRISTEL brand, which focuses upon the decontamination of medical instruments by hand. So we apply our chlorine dioxide chemistry in the form of a wipe or a liquid or a foam to a a medical device to reprocess it between patient use. The second division of the business comes under our cash brand, and this, product range, applies the the chemistry to hospital surfaces to enable disinfection at the highest level of of chemical disinfection possible, which is referred to as sporicidal efficacy.

1:56 And we weave into the cash product range, the sustainability features, that make the product very attractive to hospitals. Our business is simple, it's focused, and we believe it has a global opportunity. The two product ranges provide multiple revenue sources within the hospital. Under the TRISTEL brand, we have performed we do perform in excess of 20,000,000 decontamination procedures every year, and they take place through multiple departments where our products are used to reprocess multiple medical devices. And here we show for you the departments that we, predominantly focus upon and the medical devices that are found within those departments.

2:43 And for the first time, we give you the split of revenue, that is applicable to each of those areas. And as you can see, ultrasound via transvaginal, transrectal, and skin surface ultrasound probes is the largest portion of our revenue, followed by ENT, nasoscopes, cardiology, and so on down the list. With the cash range, our products are used hospital wide, and they're used to disinfect the types of service surfaces listed here, bed mattresses, IV poles, trolleys, commodes, and also floors and walls and general high touch points within the hospital. And this is a a much smaller element of our overall business, but we do have the great advantage that we sell products throughout the hospital, which gives us great depth and breadth to the business.

3:42 Financial highlights for the period that we're reporting upon. Well, we think this is actually a really fantastic set of results. We're delighted. We've achieved 20% growth in turnover, hitting a record level of £20,900,000, and it's the best six months we've ever had. The overseas sales that, that we have made during the six months increased by 13% up to CHF 12,700,000, and this was driven by our international distributor business, which performed particularly well as did our European operations. We're reporting EBITDA up by 21% to 4,700,000 and adjusted EBITDA up 18% to 5,400,000.

4:27 And we adjust by share based payments. We believe it helps investors and shareholders understand the underlying profitability of the business if we add back this cost, which is a variable and and to a large degree out of our hands. So adjusted EBITDA, up 18% to 5,400,000 and giving a margin EBITDA margin of 26%, which is above our internal target. Reported profit before tax increased by a very pleasing 44% to GBP 3,400,000, and adjusted profit before tax up by 34% to 4,100,000. Again, it's the highest profit we have ever reported in any six month period.

5:14 EPS increased by a 104% to 6.5p per share, helped by a, a tax rate of 10%, a reduction on last year as a result of, the impact of share based payments on deferred tax and the volatility of our of our share price. Adjusted EPS increased by 87% to 8.68p per share. We've doubled our interim dividend to 5.24p per share, in line with our revised dividend policy, and this will be paid on the April 12 with an ex dividend date of the March 21 and a record date of the March 22.

6:00 We had cash and deposits of 10,800,000 at the end of December, and we have no debt. Some of the operational highlights of the six months include the first manufacture and launch of TRISTEL ULT, ULT standing for ultrasound, into The United States ultrasound market. I'll talk about that more as we go through the presentation, but it is a a very exciting time for us to finally be launching the product that has taken us a number of years to achieve approval for in The USA. We also achieved approval for the same product, with Health Canada post period end. So now we have TRISTEL ALT available for sale through throughout the two countries, US and United States and Canada.

6:51 And just last week, we received approval of our EU from the EU medical device regulation legislation of our cash tank and capsule product. So this is part of our cash range, surface disinfection, with sustainability at its core. And finally, we have received approval for that. So a fantastic set of approvals as our operational highlights and, most certainly, paving the way for future revenue growth.

7:27 So talking of revenue growth, this is our ten year half on half sales growth record. The year the six months that we're focusing upon here demonstrate 20% growth, and the source of that is 1,900,000 came from pricing increases, and 1,500,000 came from volume increases.

7:52 Around the world, we have 14 subsidiaries, wholly owned subsidiaries, which contain their own TRISTEL employed salespeople, and there are 60 plus salespeople within the business. And we also have a a portfolio of international distributors, which we use to address the young and growing markets, and often we bring those distributors in house. So we have acquired over the years seven different distributors who were particularly well performing. But in this set of results, our international third party distributors achieved the highest level of growth within the entire business of 43%, which is really encouraging for us 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.

8:52 We are achieving high growth rates. In particular, we've noticed that, The Middle East is a a very encouraging, area for us. Saudi sales grew by 230,000 of that 600,000 growth. Spain increased by over a 100,000. And I Ireland, The UAE, all really strong contributors to our distributor growth, number there. We also saw good growth from Europe, 11% coming out of Western Europe. That's the set of companies that we acquired in 2018. Within Central Europe, which is based out of our Berlin office, we achieved 14% growth. And in Italy, under the Southern Europe banner, we achieved 17% growth. So very encouraging for us that there's still a lot to go for here in within Europe.

9:48 And, of course, within The UK, we're reporting here 30% growth. So, again, very encouraging for us. New new and increasing number of customers. Our procedure numbers are up, and our, market penetration continues to increase. Asia has been a bit of a conundrum for us. So China, Hong Kong, Malaysia, Singapore, flat during the six months. The the underlying mechanics of that are that our medical device business grew, but our cash surface product sales declined very slightly. The, the reason we think is down to pricing, but with our with the the recent approval of tank and capsule, we believe that we can go back into those hospitals in Asia, demonstrate the product, and offer it at a lower price, which enables us to get back on a growth trajectory within Asia.

10:54 So sales growth by portfolio and channel are shown on this next slide. And as you can see, the the the driver of growth came from our medical device decontamination segment, and cash sales slipped back very slightly, as I mentioned. But the but overall, it's very pleasing to see 20% growth for the entire portfolio.

11:25 So North America. Well, the next four slides contain a lot of information. I'll I'll try and walk you through it so it's all fairly clear. As a reminder, TRISTEL ULT is a high level disinfectant for endocavity probes. They're probes that enter a a natural orifice of the body and skin surface transducers, those that, we may be more familiar with that run over the surface of the skin. The product has been approved by both the FDA and Health Canada now. We estimate that there are 50,000,000 ultrasound scans performed, excuse me, within North America, which require high level disinfection annually. That translates to a million pound a million dollars, sorry, a $100,000,000 of combined revenue for TRISTEL and our partner in The United States, Parker Laboratories.

12:28 We receive a 24% royalty on all the sales that Parker, make into the into the hospital market. It gives you an idea of the market opportunity for TRISTEL within The US on this single product. The incumbent market leader in ultrasound is a machine. It's a company called Nanosonics, and the machine is a Trophon machine machine. Not all ultrasound probes can fit inside it. And in those instances, hospital clinics have to find an alternative decontamination method. The alternatives to them are to soak the device, so place it in a a bucket of of chemistry.

13:14 And that's really not a preferred option because it's it's unsophisticated, it's uncontrolled, and and the risk is to staff that a bucket of solution can cause difficulties for for them. So but some of our early adopters within The United States who have picked up the TRISTEL product are using it, in fact, alongside their TROPHON machine. And that's so that they can utilize a high level disinfectant for, for all of their probes, the ones that fit into Trofon and the ones that don't. So that's the first segment of opportunity for us, which is to to use, that the clinic uses our product for devices that don't fit into their incumbent,

14:08 method, which is a Trophon. There's a second opportunity for us, which is people who help clinics that have got a Trophon, but they just don't like it. It breaks down. It's expensive. Whatever the reason might be that the the the clinic is, dissatisfied with that machine based process and would prefer to have something different. And we are the only other, appropriate and approved high level disinfectant, for The US. So that's the second area of opportunity for us. And the third is for hospitals who are actually not compliant. They're not using a high level disinfectant for whatever reason that might be. It could be cost. It could be the the logistics of of of adopting a a machine, or it could be the the space available availability that they have. Whatever their reason, they

15:10 haven't got a high level disinfectant process in place where we can be a turning point for them. In terms of the timeline that we're following in North America, we have spent the last four or five years cementing our commercial relationship with Parker Laboratories. They have taken on the manufacture of TRISTEL PLC and also the distribution of the product into The United States and Canadian markets. In June last year, we approved our f we achieved our FDA approval. And immediately afterwards, we attended the American Infection Prevention con Congress, EPIC, held in Orlando, where we showed the product. We saw customer responses to it. We took down a list of interested parties of leads. And in October, when we had gone through the validation of Parker's manufacturing process and we had purchased in componentry, we were ready to, dispatch out to those leads that we had garnered, the the product for sampling. And so that took place in October. We received back that feedback and which was really very positive. We're delighted with the the level of interest

16:41 and the compliments about the product.

16:44 So that's then in November, we were able to make our first commercial Parker were able to able to make their first commercial sales of TRISTEL PLC to end users. And since then, the product has been, revenue has been increasing. Royalties have been increasing, and we're we're underway.

17:05 In January this year, it says 23. It's actually '24. Health Canada approved TRISTEL PLC. Parker will also manufacture and distribute the product into Canada. Their sales team stretches it throughout the North American region, so it'll follow exactly the same pattern and the same process as within The United States. And TRISTEL will receive a royalty on all of Parker's sales, and that's calculated at 24% of Parker's invoice value. So where we are at the moment, our current status is Parker is expanding its national sales force. It's doubling it. And we have established a small office in Boston, and we're transferring two of our senior business developers over to the North American office to to help by supporting the Parker sales team to attend conferences with them, to be, available to lobby key opinion leaders,

18:09 attend conferences, and and generally oil the wheels as as as Parker continue with their expansion of the of the very small, but certainly very real user base that they've already already established.

18:33 So next, we look at the ophthalmic opportunity. So within North America, we, we are exactly the same as the rest of the world. The

18:47 ophthalmic departments within hospitals use devices which touch the cornea. And in accordance with what's referred to as the Spaulding classification, anything that touches a mucous membrane of the body, the cornea being one of those, requires high level disinfection. Universally, however, within op ophthalmology, the devices are only low level disinfected. And that's simply because there is no availability of a suitable product to high level disinfect. The very small lenses and packometers and tonometers that are used within an ophthalmic department. As a consequence, there are risks of infection, eye related infection, conjunctivitis.

19:37 We've probably all had conjunctivitis. And in The US, six million people annually have conjunctivitis. Well, the devices are a route of transmission. So if an eye clinic has, reported to it that its patients are experiencing conjunctivitis, that indicates that there is an adenovirus, the virus that causes conjunctivitis, an adenovirus outbreak within that department, and the department has to close. That's extremely costly to the department, and of course, it means that patient lists get canceled. So we believe there is a significant opportunity for TRISTEL OPH. It is a a foam disinfectant. It takes exactly the same form as TRISTEL ULT, but it is designed and instruction is instructed for the user to use upon ophthalmic devices.

20:33 The global sales of TRISTEL OPH in the rest of the world outside of North America are in the region of £1,000,000, and they focus on UK, France, Germany. But we believe that within The United States, there's quite a significant market for this product. We already have it approved in Canada, and we're receiving very positive feedback.

20:57 When there is a a disinfectant available, it becomes a driver for the authorities to enforce the adoption of the appropriate disinfectant practice. If there is no product, it's impossible for the authorities to enforce practice. But now that we have, we have the product launched within,

21:22 Canada, and we hope by the end of twenty twenty four to have the product launched within The United States, then the very significant markets, and here we're saying three million people in North America have glaucoma, which requires multiple, examine eye examinations through treatment, but there are also cataract examinations and and other eye related conditions that require, tonometer and lens examinations. With all of that, with the this all creates a very significant market for TRISTEL OPH within the whole of North America. So it's another very exciting opportunity for TRISTEL.

22:12 The progress we've made with respect to ophthalmic, the ophthalmic product. As I say, in Canada, we have approval. We have a distributor in place a company by the name of Innova Medical Ophthalmics. They are our national distributor for the Canadian market. We've got, Alberta Health Service who was our first user. We now have 24 repeat users across Canada, and we estimate that we've got 12% market penetration. Within The US, our five ten k submission will be made in the summer. We expect yeah. We're using the predicate of, Tristel Alt for which the, we followed a de novo pathway.

22:59 So it's a five ten k much faster process for us with with, Tristel OPH. We have a meeting planned with the FDA on the March 6. We assume submission in the summer, and we expect approval by the end of twenty twenty four. It's our best guess of the time scale. We haven't yet got a distribution channel in in mind. It could well be that Innova, can take the product into The United States as well as, they're doing their work in Canada, or we may look for another ophthalmic distributor. Then we haven't started negotiations on that yet. But the product will be manufactured by Parker Laboratories

23:41 along with any other foam products that we will launch into the North American market. So we've got a stable and very capable partner in Parker Laboratories.

23:58 So I've been talking about TRISTEL PLC and TRISTEL OPH, and they've been our major product development programs over the course of the last few years. But we also have three further work streams that, we focus upon in terms of, development of new products. The first is our three t platform. This is an app based firmware and software program, which enables the the individual carrying out the decontamination process to have a tool that walks them through each stage of the process. It will it shows videos so that they can see precisely how they should be performing the the decontamination process so they can train on it. They can also track the process step by step.

24:48 It captures all of the relevant information, of the of the process, so who the patient is, who the operator is, what which device is being used on the patient, and which of our TRISTEL product is being used to decontaminate that device so that you have complete traceability providing assurance to the to the clinician. Well, we've recently launched version two, and we continue to work on improvements and enhancements to the three t platform. The second work stream relates to AI where we will incorporate into three t an objective verification of the key steps that are performed. So the app will monitor and watch the process, and it will give a a stop go, approval for the user so that they know that the device has been completely covered by the chemistry and so that they can see that the, the chlorine dioxide has been properly formed.

25:45 And then the third element of our product development relates to color change technology, where we're using visual indicators to ensure that the key steps of the decontamination process are performed. So you can view the three product development projects as the provision of assurance to the user that their medical decontamination process has been performed completely and therefore is the equivalent of machine based processes.

26:17 As a reminder, seven years ago, we shared our internal financial targets, and they are currently sales growth in the range of 10 to 15% per annum as an annual average over three years and an EBITDA margin of at least 25%. At the time of our prelims in October, we shared with you that we intended to review these targets and and and increase them, increase the hurdles for ourselves. But as we're going through a CEO succession program at the moment, the board feels it would be inappropriate to set the changes to these targets until a new CEO is in office. So we will, review these as soon as the succession program comes to an end.

27:14 ESG. Well, we continue to focus upon sustainability with respect to the both the company and the way that we operate, but also our products. We weave the ESG principles, our ESG strategy into everything we do. It's absolutely at the heart of the business, and that comes from carbon footprinting. It comes from, focusing upon, the materials we use and how they are, the the effects they have, when they are disposed of and right through to the way that our board operates and, and the way that we treat our staff. So we are we continue to focus upon ESG.

28:01 We've continued to put great effort into doing everything we do in the right way. So as a summary, we see this as a well, it is a record set of results on every level. There are significant growth opportunities in both portfolios ahead of us, and we continue to be profitable, cash generative. We are debt free. We have a progressive dividend, and, management, the board feel very strongly that the company has a very exciting future ahead. Thank you. Thanks, Liz. This is Paul McManus here from Warbrook. We've got a few questions that have come in from investors.

28:52 If we're happy to take those questions. Just to let you know that as well as Liz Dixon, CFO, being in the room, we also have Paul Sweeney, CEO, and Heidi Allard, the chief financial controller and company secretary. So they may be able to answer some of the questions as well.

29:09 One of the questions I know you talked a lot about America and the opportunities there, but one of the investors was just asking, could you just get a a bit of color and background to The US opportunity and how it arose?

29:19 And then what the competition landscape's like in The US? And, you know, could that really be the game changer that they think it could be? Okay.

29:30 So the what's the background to The US opportunity? Well,

29:38 TRISTEL has been a very successful business around the world. And indeed, in this set of results, 20% revenue growth has come from all of the other markets in which we operate. And the the product sets that we're selling currently have really only been, in existence for the last ten, fifteen fifteen years, seventeen years, something like that.

30:00 So The US opportunities came came about by the fact that we had built the business to a scale that we were able to invest sufficient we had sufficient profit to invest in the very significant cost that it that was that was required to attain FDA approval. So our product did require FDA approval. We're a medical device. And and as a consequence, we had to wait till the right time before we could seek that approval. Before our approval, the only other high level disinfecting process that was available to The US market was a, as I mentioned, a machine based process, which is, is the name of the device is, is is Trophon, and it is a a hydrogen peroxide vapor, which is pumped into a chamber into which the medical device sits.

31:06 TROPHON, currently captures around half of the high level disinfecting procedures that are required within The US market. We believe that there are, 200,000,000 procedures that take place ultrasound procedures that take place within The US that, that require intermediate and low level disinfection and 50,000,000 procedures that require high level disinfection. So we're working alongside Trophon for that 50,000,000 procedures. And we sit very comfortably alongside Trophon if that is the the requirement or the preference of a of a ultrasound department.

32:00 There are not not every ultrasound probe fits inside a TROPHON, so there's an automatic market for us with devices that are too large to go inside a TROPHON, and that will be the the very first segment of the market that we go for. It's the low hanging fruit as it were. There are other customers who have got a TROPHON, but for whatever reason they're dissatisfied with it, that opens the possibility for for us to step in. It our product does not require capital equipment. It does not require upfront investment. There are no maintenance fees with our product. And our our consumable price is a is is equivalent or even lower than a TROPHON maintenance and and and chemistry cost.

32:49 So there's good reason to move over to a a TRISTEL product as opposed to sticking with a a machine. And then there's another segment of the market where inadequate practice is performed. For example, soaking the device or or using an inappropriate and a low level or an intermediate level wipe or or or chemical. And in those instances, the it's in the customer's best interest, in the hospital's best interest to find a process that is affordable, that is easy to use, but is as high performing as anything on the market, and we can provide that. So that's that's the that's the that's that is who the competitors are and and why hospitals buy our competitors.

33:38 And our unique selling point, they are very, very clear. The product is mobile. It's a bottle of foam that is applied to a wipe, and it's used instantly. It has a two minute turnaround, and then the the clinician can move on to the next patient. So it's fast. It is extremely efficacious. It provides the highest level of decontamination that can be achieved without sterilization. So it is exactly what those these particular devices require. And it is it it's it's fast. It's efficacious, and it's set at a price point that is that is appropriate to the market, and it's perfectly safe for the user to use.

34:27 Thanks, Liz. There was a question also from another investor about competitors and your unique selling points, so I think that addresses that one as well. Okay. One question. Do you make any sales based on word-of-mouth? Oh, we make sales based on referral. Absolutely. What you will find within the health care industry is that clinicians move between hospitals, and it's very common for us to to be called into a hospital, where, you know, a new infection prevention lead has has taken up post. They use TRISTEL in their old trust or their old hospital, and it's, absolutely something they would like to to bring into their new hospital. So, yes, definitely. Definitely one word-of-mouth. If we're still on The US side, another question was about, can you help us understand your market strategy in The US? Does it rely on being cheaper per use than TROPHON in being a $100,000,000 opportunity for Park and TRISTEL? Does this assume taking share from Nanosonics?

35:27 The the okay. I think I've described the strategy. We've got the the three different market potential, the the customer segments that we are that we're addressing. Does it rely on us being cheaper than Nanosonics? No. It doesn't rely on us being cheaper. The product is entirely different. It's a manual product. It's much faster, and it is mobile. And these are just as relevant to a hospital as price. And the 100,000,000, is it part of the Sorry. Let me get you the in being a $100,000,000 opportunity for Park at TRISTEL, does this assume that you take share from NovaSox? No. It doesn't. No. No. Absolutely. That's what's available to TRISTEL.

36:14 Thank you. This is a question maybe Heidi might pick up. There was oh, let me just find it. I oh, yeah. Question was, what is the long term split of revenue growth by volume and pricing, please? And I appreciate pricing is probably not something that you would be allowed to discuss competitive issues. And then there's a question the second part of the question is about Australasia with plus 5% in revenues. Do you face a lot of competition from Nanasonics? So maybe, Heidi, you could talk about growth and what how that that's factored in regarding volume and price, and then I'll come to Paul and Liz regarding Australia. But I think it's very much safe to say that future growth will be volume driven.

37:04 We obviously have our financial targets of sales growth in the range of of 10 to 15% that we will be reassessing later in the year. But I think it's safe to say that that we we can we can safely assume those growth rates. Mhmm. Absolutely. Very much volume led. Yeah. We do have a price increase annually, but we we we generally pitch that at inflation. This year, there's been a bit of a jump up. But, yeah, generally speaking, we we pitch price increases to inflation. And the second part of the question was about Australasia with a 5% increase in revenues. Do you face a lot of competition from nanasonics? I presume the question is because that's their home market. Nanasonics operate in most of the markets that we operate in. And even in all of them, even their home market, we outperform them in terms of the number of procedures that are performed using our products compared to using nanasonics.

38:02 It's it's a matter of choice, a matter of preference for the user. Do you want a machine? Do you want to do you find a a manual decontamination pro process preferable? And the vast majority of the time, manual beats machine. And yeah. Simple fact. Thank you. This is a question just about your share based payments. There was an investor who's asking, are there any restrictions on your share based payments? And do you monitor whether the recipients retain or sell them? Okay. No restrictions on the share based payments. I think perhaps you mean other restrictions on the shares themselves when they have all the options as when they have been issued. It depends on the plan. Certainly, for the the LTIP for for the the executives, yes, there are restrictions on, you know, holding the shares for a certain period of time and and and, of course, they're target driven.

39:01 For the all staff share option scheme, the there is a a hold there is an exercise hurdle, I think, of one year after grant. But apart from that, no. There is nothing. They are all market priced at the time of issue, and it's a a wonderful, incentive for our workforce and really aligns the whole business' thinking and and attitude and approach to that of shareholders. So we are all watching the share price day by day, and I can I can guarantee there will be on this call a number of TRISTEL staff who are very excited about how the share price is moving in response to this set of results?

39:46 I'm sure they'll be delighted about the the news on the doubling of the dividend as well. Yeah. But one question was, will that be repeated at the end of the year? Is the payment being or is the payment being rebalanced? It's not a straightforward doubling of the of of the interim and the doubling of the final. The 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 we with a with a a floor of 5%. So we will always increase our dividend by 5%. But if EPS has increased by more, we will increase the dividend by more. We have a 60% split of interim to final, and and so the the the maths worked out that there's a doubling of the interim. It's it's it's just a simple calculation.

40:44 Thank you very much. Another question. Does UV light, the Kronos product, provide an equivalent disinfection to TRISTEL products? Is it a threat? And if so, what's being done about it? Cronos the Cronos product is absolutely right. It's a UV light box into which a an ultrasound probe is placed. It's available in available in some of the markets in which we operate. And, yes, it is a competitor. Is it an equivalent disinfection process? That's difficult to determine because they're currently is not in place a standard and a an evaluation methodology that's designed specifically for UV light.

41:31 So as a consequence, the the is it germ Germatec? Yeah. Germatec who produced the Cronos machine, they have adapted a chemical decontamination standard to modified it to carry out the testing on their Cronos machine. There's a big difference between using a chemical to decontaminate a device and using lights to decontaminate a device. And so there are question marks being sort of raised over whether the adaption that they've made to the to the standard is appropriate and whether customers can actually rely upon the data that has been created as a consequence.

42:19 So UV light's a new technology. The market needs to catch up. The regulators need to catch up and put in place a form of assessing its effectiveness. So, certainly, it's a competitor. Is it a equivalent? Well, we have to wait until there's proper data out there to demonstrate that its performance really is equivalent to to chemical decontamination. Thank you, Liz. A question on on margins, and I I know that you can't give us sort of cast cast iron guarantee of what future margins will be. But Mhmm. Gross margins for the device disinfectants was 87 versus 85 for the preceding full year. Yeah. Are you able to outline what in particular is driving the positive gross margin improvements? Mhmm. And then the second part is what is the likelihood of gross margins for device disinfectants creeping any higher? Mhmm. Well, I I suppose that the the obvious thing is price increases. So within the six months, there were price increases, which benefited revenue and benefited gross margins equally.

43:30 We keep ahead of inflationary costing inflationary cost increases and, well, noninflationary cost increases as well. And and so that really is the reason for the for the for the increase in this period. Do we expect it will increase up to 90%? I think it's unlikely that we will hit 90%. That's certainly not what we're forecasting. There is a product mix element always to the gross margin, and the the larger our medical device product portfolio grows in comparison to the other portfolios which are lower margin, then it can push our reported gross margin up. But will it get to 90%?

44:16 That's not in my forecast. No. Thank you. Given the new cash approvals, how do you view the sales growth and growth margin gross margin potential for the surface division? Could the division ever match the scale of the device disinfection division? How large is the wider surface cleaning market compared to the device disinfection market? Okay. Well, the surface disinfection market, we have valued at 40,000,000 4. Sorry. 4,000,004 million pounds. Billion. Billion. 4,000,000,000. Sorry. £4,000,000,000 globally. Do we how far do we think we can go with our cash product range?

45:04 We expect it to in time, and, you know, I'm not I'm not gonna say when, but in time, we expect it to rival the size of our medical device sales. It is a huge market. The products are they're they're they're different. It's an it's it is an it's a niche for us because we provide a very high level disinfecting performance level. And so and we can do that at the price of a low or intermediate level alternative product or competitor product. So there is a a huge opportunity for us to be transformational in the surface disinfection market. So although it sounds like a big ask to grow our cash market to the size of our TRISTEL market, there is the potential for it.

46:02 And I don't know what the rest of that question was. Right. Just bear with me. It was I think you've covered it. It was it was how large is the wider surface cleaning market compared to the device disinfection market? Well, it's bigger is the answer. It's it's much, much larger than the medical device decontamination market. What is the pry sorry. What's the on margins, actually? There was a question that came through. Are there any economies of scale as volumes ramp up that you can take advantage of? Well, there's always economies of scale with purchasing, you know, price breaks on on purchasing of componentry. There aren't any that really and other than that, nothing really springs to mind. But just the Yeah. I would I forgot if I might chip in there. The the economy of scale that is let me get in front of the camera. That is available to us is that we aren't creating a second Salesforce to represent the cash products within the hospital marketplace.

47:03 We as an organization, we've got some 250 employees, and one in four of those employees is a salesperson. We've got a Salesforce worldwide of 65 there or thereabouts. They sell to the infection prevention community worldwide now, and they represent the TRISTEL product range to that community. And now they can talk to the infection preventionists about surface disinfection as well with the same chemistry. It's acknowledged and has been adopted for device disinfection use. Why not use that same chlorine dioxide chemistry for surface disinfection use if it's at the appropriate price point. And by making a distinction in our branding strategy, we can do our best to avoid TRISTEL and CASH cannibalizing each other, which is a very important consideration in the creation of the two separate brands. And they are completely different products in terms of form, if not function.

48:07 So double sales on the same cost base as is represented by that Salesforce, and that's one very significant economy of sale at scale that will be achieved by this business as we see it developing to the future. Thank you. Thank you. What is the penetration of the NHS market for your product? Well, we measure that by different areas of the hospital. So as an example, our ultrasound business within the NHS, we estimate that it it is around about sixty, seventy percent of ultrasound procedures within The UK use a TRISTEL product. The ENT market, about the same level of penetration, TRISTEL product used to decontaminate nasal endoscopes.

48:59 And, within cardiology for toe probes, t probes, they we have a very high level of penetration in the region of eighty five, ninety percent. So depends where in the market, where in the hospital you're thinking, but we do have we certainly sell into every every hospital within The UK. Somewhere, you'll find a TRISTEL product. In some hospitals, we are widely used, and in in others, less so. Thank you. The fact that the cutting cache cache cost per treatment to the client, so cache cache by a tank Mhmm. Will gross margins in cash continue to fall? It was 64% in 2018, 56 in full year '23.

49:46 Does this tell us that cash is the go to market strategy needed changing and that cash is much more competitive in a much more competitive market? Well, cash is in a competitive market, certainly. Certainly, the surface disinfection market is not willing to pay the premium that that the device disinfection market is willing to pay. There are many other disinfectants out there. And and the the the incumbent surface disinfectant product is is bleach. It's chlorine tablets, which are very, very cheap. So we've designed our product to be, well, for for for two purposes. One, to address bleach, which is used to, mop floors and, and clean large surface areas within the hospital.

50:39 But the other is, is to, 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 and and and they are high touch surfaces. So in that in that that instance, a sporicidal disinfectant is really, really important. Not every hospital can afford to use a sparicide around the patient. They cannot the the use of the product is not appropriate because the part because the alternatives to TRISTEL can be really quite noxious, but it also they tend to be priced at five to 10 times the price of chlorine type tablets.

51:24 So we are bringing our product to market at the lowest possible price to combat the the the products that are incumbent within for for floors floor cleaning, which is bleach, and near patient areas, which tend to be wipes, and those are plastic wipes pulled out of a a flow wrap for continual use. We can we can rival both of those products and price that the lower of the two prices. What is the price difference between somebody is asking between tank cash product Mhmm. And the equivalent of, say, 2,000 sporicidal wipes? We How much would hospitals save? They will what the saving will be that they can have a sporicide. They can have the highest level of of efficacy in their product without taking the price up.

52:12 So we match we seek to match our our tank pricing to the pre wetted plastic wipes that are found throughout the hospital. And they themselves may not be sphericidal? They're not sparicidal. No. They're low level wipes. So we are the the offer is increase your increase the hygiene level within the hospital. Another question. Back on to competition, I'm afraid. Why would one of 5,000 hospitals which have already invested in an Amazonix TROPHON want to change to TRISTEL PLC to an equivalent price per use? Well, because the machine comes to an end of life stage, which is round about seven years. And so the hospital then needs to make a new investment in the machine.

53:00 The hospital needs to also purchase a traceability package through the company, and, and TRISTEL offers its traceability package for free. And the hospital will incur ongoing maintenance and repair charges for their machine over the course of the following five, seven, ten years when the new machine is in place, which they won't have to do with TRISTEL. So quite likely, a hospital that's just invested in 10 TROFONs is not going to immediately stop using them and switch to TRISTEL. We're, you know, we we're not suggesting that. What they may do is bring TRISTEL on board and use it in parallel to their existing machine based processes. And then over time, we believe that they will see the ease and the the appropriateness of the product that we are offering, and there's no need for them to then invest in new machines when they come to their lie end of life.

54:04 Are you able to make some comments on customer concentration? 20% of your medical equipment disinfectant comes from one customer. Is that a single customer? Is it a central NHS buying agency or a large trust? Could you just explain that to investors? Yes. It is. It's it is it is based upon the NHS, and that that is our largest single customer. Okay. How will you acquire account for the 24% royalty income? Because it's 100% margin. Right? Yes. So if you include it in sales, would this would bias gross margin calculations. So will it appear as other income? How will you No. It won't go into other income. We've had this conversation with our auditors, and they've they've done their thinking. We've done our thinking, looking through the standards. It'll go into revenue, and it will increase the gross margin as it becomes more more significant to the whole.

54:55 I don't think you can answer this question, but I'll ask it anyway. Is it likely that Parker will take you over with your very low market price in comparison to American prices? I'm afraid I can't answer that question, Paul. There are a couple of other questions that have been asked, and I I'm not sure we can answer them. One was asking about Paul's decision to retire. I mean, Paul's been chief exec for thirty years and and said that he would stand down December. I don't think it's that because I shouldn't be putting Paul on the spot to to give reasons, and and he hasn't done so in the r and s. Mhmm. There was also another question about whether current executives have put themselves forward. Again, it's a confidential process in terms of the CEO role. You the the board have made it clear that they're looking at both internal and external candidates. Mhmm. I don't think you can say anything more than that about individual people.

55:44 No. Absolutely. What we can say, is that the board has recruited a recruiter appointed a recruiter to carry out the process. It's a a competitive process. It's underway as far as I am aware. And, yeah, it'll it'll come to its conclusion when it comes to its conclusion. And then the final question was from an investor asking whether they can download the presentation slides. They are available on the TRISTEL investor relations site. Yeah. They will also be available on this platform, Investor Meet company, as a PDF that you can download. If you're having any trouble getting hold of the presentation, please email me at the Warbrook team, tristel@WarbrookPR.com, and we'll email it over to you. I'll hand back to investment company for it.

56:30 Liz, Paul, Heidi, Paul, thank you for answering all those questions you can from investors. And, course, the company can review all questions submitted today, and we'll publish those responses on the investment company platform. Before redirecting investors to provide you their feedback, which I know is particularly important to yourself and the company, Liz, could I please just ask you for a few closing comments? Absolutely. Well, again, thank you for joining. Thank you for your continued interest in the company. I hope we're delivering upon your expectations. We believe the company is at a fantastic, point in its in its evolution, and, we're very excited about the future ahead of us. Liz, Paul, Heidi, Paul, thank you for updating investors today. Can I please ask investors not to close this session? I shall now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations.

57:18 This may only take a few moments to complete, and I'm sure we're greatly valued by the company. On behalf of the management team of TRISTEL PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all.