Tristel (LSE:TSTL) — Interim Results for the six months to 31 December 2024

0:00 Good morning, and welcome to the TRISTEL PLC interim results investor presentation. Throughout the quarter presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time just by using the Q and A tab that's situated on the right 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 received in the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll.

0:28 I'd now like to hand you up to chief executive Matt Sasoni. Good morning, Good morning, and good morning to everyone that is joining us online today. Thank you ever so much for taking the time to listen to our 24 2024 interim results. I appreciate many of the people that are joining us this morning are aware of the the TRISTEL story and what we do. But for those that are new, to TRISTEL, I'm just gonna take the first couple of slides to explain who we are, what we're about, and what we do. So our company is an infection prevention company. Our purpose is to prevent the transmission of microbes from one object or person to another. How we achieve this is by applying our very powerful, chemistry, which is chlorine dioxide, to the target environment, surface, or medical device.

1:25 Our products, fall into sort of two categories, really. We have our TRISTEL range, which is focused on the decontamination of medical devices, and we have our cash range, which is focused on the, disinfection of hospital surfaces. You can see there we have an ambition to be a leader, on the TRISTEL, leader in the point of care, decontamination medical devices. And with regards to cash, our ambition is to be the the global market leader in the niche of sporicidal surface disinfection. So not the entire hospital surface disinfection market. When you look at the split, of our two businesses, you can see that TRISTEL represented, 87%, of the h one sales, and you can see which kind of target medical devices, that we apply our chemistry to.

2:22 And we mainly focused on, nonlumen or single lumen, medical devices, that are heat sensitive, that can't be sterilized or decontaminated by normal means. And in the last twelve months, our chemistry, has been used over 23,000,000 times, for the the medical, device decontamination. Then, sort of newer portfolio, the cash portfolio, that represents 8% of our h one sales, and we are focused on a a sort of the more general, market and surface disinfection. And you can also see there, we put for the first time the number of kind of cleaning events or disinfection events with our cash range, which is 20,000,000.

3:09 So it's a large number, but obviously generating much smaller revenues. How do we win? Well, on the TRISTEL, it's always, our value adds and our value proposition, which customers really, appreciate is the convenience. We are, have the ability to provide disinfection at the point of care. We do it in a very, fast and efficacious manner with contact times of between thirty seconds or two minutes depending on the on the product. Our chemistry is safe and presents no risks to the users. And really sort of things that set us apart is our compatibility. Over the years, we have been tested and approved to be used with thousands of different medical devices.

3:56 So, you know, we have a very compelling offering. We do have competitors, and these are a variety of forms. Some of manual like soaking, and others are automated, like, vaporized hydrogen peroxide. On the cash portfolio, we win again through the unique, qualities of our chemistry, demonstrating higher efficacy than, the products they use today, faster speed of action compared to what they're using today. And then, you know, we're addressing some of the needs that our users have. You know, if we take antimicro micro resistors, for example, some of the cleaning products that they're using today are actually sort of adding to the problem, whereas this is something that we do not contribute to.

4:45 And, also, some of the chemistries they use today are quite toxic and damaging to the environment. And, again, this is something that we're able to differentiate ourselves with regards. So, you know, we have some great products, and an and an exciting market. And I, myself, have been with the business now for five months, so I thought it'd be worthwhile for me just to spend a little bit of time to tell you my impressions after the first five months of being with the business. First of all, it's an exceptional company, not just with regards to our people and our products who are talented and outstanding, but also the value that we're able to to deliver to our customers. And then operationally, we're excellent. We have a robust site chain.

5:34 We have first class manufacturing and, you know, a great, r and d team and a sort of, like, a team that supports us on our day to day, operations. We have been a business that's created the market for ourselves. We've been tremendously successful and comes with that our competitors. And we see that these competitive pressures are increasing. It means we need to sort of sharpen our our needle and and to maintain our success. And, you know, what we're doing there is is focusing on our execution, but I don't want people to get too concerned about the competitive pressures. There's always been

6:16 competitors, for our TRISTEL offering. We're just having to sort of deal with more sort of local players, that occasionally pop up. But, you know, the team is well versed in what we need to do and ensuring that it doesn't distract us too much from our day to day activities. When we look ahead, it's, you know, very exciting future for the business. I can see a significant runway for for growth ahead. You know, in markets, we are taking share. We are seeing, customers use, high level disinfection, more and more, so the adoption is increasing. And we also recognize that, you know, we are penetrated in a few a few markets across the the globe, but there's many other new markets waiting, for us to open up, and for us to start selling, our chemistry in those. So, you know, the near term opportunities are very exciting.

7:15 Over the last, few years, we've invested significantly in our surface disinfection market, and this represents a significant opportunity for us. But, also, we've gotta take some care as we go forward for this market. Our secret, success over the years has been focusing and being very targeted on profitable niches, and we need to apply that same rigor to a surface disinfection market. And I'll talk a bit more about this in some of the slides, coming up. The near term opportunity to drive global penetration. Yep. Basically, what I'm trying to say here is our greatest opportunity for growth is gonna be, you know, within our existing markets with our existing portfolio.

8:02 You know, we are far from being penetrated, and, you know, we have The UK market as our core home market. But when we look across the the the globe, we see great opportunities to drive greater growth and also drive greater growth in The UK too. In the mid to long term, we see the potential to unlock major new markets, and everyone is very much focused on The USA. I will provide an opportunity on The USA, but the headline is, you know, we feel very bullish about our success that we've had so far and the future, and we believe that we can win and win big, in The USA market. Morning, everyone. This is Liz Dixon here.

8:50 We are, we will I'll run through the financial highlights with you here, and, we're looking at a set of results here where we've delivered strong performance in this first half. It's in line with both the market expectations, but also with our own internal forecasts, our internal targets. Running down the highlights themselves, revenue increased by 8% up to 22,600,000. That's 9% at constant currency, which is, of course, slightly behind the the the growth rates that we have achieved in recent times. But we know where those where the issues are that have reduced our revenue growth percentage, and they're all fixable problems.

9:35 So we feel that returning to double digit growth is definitely achievable for us. But running down the p and l, then we can see that adjusted profit before tax increased by 19%, which we're delighted with up to £4,900,000 in the half. Adjusted EBITDA was up by 14% to 6,300,000, and we achieved an EBITDA margin of 28. Adjusted EPS sat at 8.17p per share. It was negatively impacted by an increase in the effective tax rate, which increased from 10% up to 25% as a result of Patent Box relief ending in this financial year. But nevertheless, our interim dividend has increased up from 5.24p to 5.68p per share, payable on the April 11 with an ex dividend date of the March 20 and record date March 21.

10:36 And that leaves us leaves us with cash and deposits, which increased up to 11,700,000, up from 10.8 in the comparable period. And just a reminder, the company has no debt.

10:52 Over on the next page, operational highlights. Well, Matt joined us in September last year, and I think we can state very confidently that it's been a successful transition. And he shared with you his first impressions. During the period, we made our application our submission for a second US product clearance under a five ten k. So this is for TRISTEL OPH. It's a high level disinfecting foam for the decontamination of ophthalmic devices. We received a request back from the FDA for additional information, and we're in the process of compiling that test data. It's not a surprise to be asked to provide additional information, but we're going through the process of collating that and we will submit that back to the FDA shortly and still expect clearance by the summer of this year.

11:54 And then a couple of other operational highlights that refer to the regulatory landscape that we're working within. The first is that we have been included in the revised American National Standard for our TRISTEL Alt technology. So that's an update which now makes clear to users of the product that they can they can use a foam or a wipe that contains chlorine dioxide. And, of course, we are the only supplier of those types of products of that technology. And they can happily use those products within The US. And then the second regulatory point relates to Germany. So we've had much slower growth growth in Germany over the course of the last couple of years as a consequence of question mark hanging over whether wiping with wiping a medical device is a validatable methodology for decontaminating it in between patient use.

12:54 Well, now the the regulators in Germany have agreed that wiping is a validatable methodology. And so they've issued a new guideline, which means that customers can now validly use it without any concern. Moving over onto the next slide looking at sales growth by geography. Well, you can see we've got a couple of areas that we we we have had some issues with, namely Australia, also within the Western Europe line, France, and Hong Kong. So there are three areas that we need to pay a little bit of attention to. I'll run through them one by one. In Australia, we have invested in our in our sales force to to build it out having had a few individuals leave the leave the company over the course of the last year. It does take a little while to get new salespeople up to speed.

13:52 So we have seen flat growth in Australasia, but we expect that to rectify itself as we move into the end of the second half and into the first half of next financial year. In France, similarly, we've had a change in leadership in the sales team. And and in both markets, we also have competitive pressures, which Matt touched upon. But these none of these things are permanent problems. They're all fixable issues, and we have confidence that in both of those markets, we can return to growth in the short term. And in Hong Kong, we have seen, again, zero growth in the period, and that's predominantly because of our surface products where what we see is where there's an outbreak or an epidemic, particularly in Hong Kong, then there's very swift take up of highly efficacious products to decontaminate surfaces such as our cash range. But then over time, when cost pressures rise again, then we see the the use of the product slowly dissipate.

15:01 Well, that's a pattern that we're quite used to now in Hong Kong. But we are looking to roll out our newer cash products out in Hong Kong to to address that. But looking at the more positive side of things, Central Europe on the back of that guideline change, we see 13% growth driven by Germany. In Southern Europe, 14% growth. That's predominantly Italy. But we are going direct in having set up our own operation in Spain with effect from the January 1. So we expect strong growth in Spain as we go through the rest of the financial year. Malaysia and Singapore, also good growth. And The Americas, of course, it's the we're showing flat growth, but that's because of the mix there of royalties, product sales into The US and also Latin And Central America playing an important part in that growth. But all looking good in The US, and Matt will tell you more about that as we go through the presentation.

16:06 And, of course, The UK is the big one here, 7% growth, which we're very pleased with because last year, we had a high level of growth consequence of price increasing. But now growth comes almost exclusively from volume increases in The UK, which just goes to show that even in very well established markets, there's always new opportunities for our products. And I just wanna jump in here quickly before we move off this slide just to sort of say, look. You know, we we we appreciate the 8% year on year growth. We are pushing hard to get us back into the double digit top line growth, and we feel that's very important. Let's think about TRISTEL that we've been able to do over the years. I say we need to get back to you. But when you look at this, breakdown by geography, you can see it's it's it's not it's not a million miles away, and it's not very difficult to identify what needs to happen in order to to get us back up to to that level.

17:05 If we talk also about some other actions, more tactical actions that we're putting in place with regards to sort of, like, our markets and and addressing, you know, some of the challenges we have with regards to Australia and France, for example, you know, is also changing incentives. Over the past, the incentives have been focused on local profitability. Now they're focused on local revenue. And and some other, some actions we have taken in order to, sort of, like, get ourselves back up and and again in those markets. So as we look, over the ten year, sales record, we've had a tremendous, track record of strong growth. That continues. Over the last few years, pricing has been sort of, like, price increase has been exceptional and have been a a big driver of our growth. We've now sort of that's been normalized, and we've returned, to sort of, like, more standard levels of of price increases.

18:06 And we remain on track to deliver our three year financial targets. So looking towards the second half and looking towards the future, how are we gonna drive greater growth in our business? So for the TRISTEL range, I've listed down here sort of four key levers for the business. The first is geographical expansion. We all recognize, the opportunities that we have in The US. This is a very exciting market where we've just got our clearance, and we'll talk a lot more about that in some of the forthcoming, shares slides. Sorry. With regards to sort of, like, expanding our reach, well, we continue to invest in direct operations.

18:54 Liz made reference to to Spain, but we're also going direct to, Austria, and I'll mention a bit about, India, as well. And we're also looking at new markets. So exploring, what sort of currently untapped markets such as Japan and Latin America. Then, you know, it's about our existing markets and how do we expand our application and our product application and get extract more from what we're doing. Well, you know, we have a great opportunity with our existing portfolio and existing markets, and we're far from done. We have a large runway. But we're also looking to get existing users to to spend more with TRISTEL, and, so in fact, get create more value by adding more products that they can use, whether that be cleaning products, some of the new products we're working on, our digital traceability, and broaden the adoption beyond our core ultrasound into other markets. We've got good penetration already into ENT, but there are other sort of, like, heat sensitive, products that, would benefit from using our chemistry and and benefit from being high level disinfected, and we continue to invest in that expansion.

20:15 What we need to do, though, is maintain our clinical differentiation and continue to invest in that area. You know, we're all consumers and, sort of like physicians, health care practices practitioners are no different to us. You know, if we have a colleague or a friend that recommends something, we immediately look to go and purchase that. And as the same happens in health care. And and so by having that influence and having our users sell a product for us is a key, sort of, like, growth, creation, and saying that we need to continue to invest in. And that's something that we will be spending more money in order to push that as a strategic lever. And our fourth strategic lever is working with the original equipment manufacturers, the OEMs.

21:01 What do we mean by that? Well, you know, we we are very proud about our level of compatibility, but what I've seen, in the first, months, with the company is some real examples of best practice. And I can think of, you know, many countries around the globe where we work hand in hand with these equipment manufacturers, and it we they are essentially an extension of our sales force. How does that happen? Well, we are present at their sales meetings. We're training them, with regards to the TRISTEL offering. And when those, equipment manufacturers are going in and talking to the customers about their technology and they get faced with the question, you know, how how can we disinfect this? You know, they immediately think of TRISTEL and promoting us at that point.

21:49 In the same way, we're actually in some countries, we're providing their staff with TRISTEL products because, you know, whether it be the sales staff or the engineering staff, they're going in and touching their products in the health care arena, and we're providing with our trust TRISTEL products so they can go in and decontaminate the devices and use it there. So, you know, it's great to see when I go to exhibitions around the world, trade shows around the world, the the equipment manufacturers' booths and their stands actually have TRISTEL products on it. It's great to learn of examples where the sales reps and the engineers actually have the TRISTEL products in their bags to protect themselves, and it's even better to learn and hear and say we need to do more of, have those salespeople talking about TRISTEL at the point of sale when they're selling the equipment in the first place. So that's a a good growth lever for us as we look to the future.

22:54 Then on our cash range, it's interesting. You know, we talked about Hong Kong, and, know, we talk about sort of, like, there being periods of time when infection control is more at the forefront, and we've all lived through COVID. But when it's not, sort of, like, immediately front, front and center, this market tends to revert back to a much more sort of commoditized, offering. That being said, it is a large and a significant opportunity for for us. And why do we say that? Well, there are areas, of the customer base which are always focused on infection prevention. It's always front of mind. And these tend to be, more of the sort of, like, the the high impact areas like the operating room, intensive care units, neonatal, units, dialysis centers, oncology units, where infection prevention is the at its most critical. And those sites are prepared to invest more in infection prevention.

24:02 They value what we're able to bring a lot more, and they are prepared to pay our premium pricing. And that's something that we need to really focus on and and keep. You know, the secret to TRISTEL success over the years has been identifying profitable niches, being very focused on those profitable niches with our very differentiated offering, and then targeting upon that. And that's exactly what we intend to do with our cash portfolio. What we have seen in the first half of the year, and it's something for us to be cautious about is, you know, we have this full portfolio now. We have this wide range, and we have this proposition that's very attractive. And, naturally, you want to do a whole house conversion. So you want to go into hospital, into a trust, and get every possible department using our cash technology.

24:57 And on the face value, that sounds very exciting, and it's, and it it seems like the obvious thing to do when you're locking up the competition. What we have found, though, is that this tends to be very resource intensive, and this is where we must ensure that we have the right balance. And why is it so resource intensive? Well, when you start to do the whole hospital and you're you're you're trying to take on all of the staff in all the areas, there are not hundreds, but there are thousands of individuals that need to be trained. There are some very ingrained practices that are hard to to give up, and we have experienced, you know, essentially huge percentages of our sales team being tied up for weeks upon time trying to reach the, you know, the sort of different aspect different parts of the hospital and without a great amount of return on it. So when we assess the opportunity, we're excited by it, but what we're doing is just sharpening our approach to ensure that we're getting the best return on investment with our cash portfolio.

26:08 So let's focus a bit more on some of the geographical opportunities we have. If I start you on the the right hand side of the of this slide and just talk a little bit more about, Spain as an example, over the years, TRISTEL has been very successful of using distributors to build up our business. And then when they reach a meaningful size, we then go direct ourselves. And Spain is another example of this where we've had I've been working with a distributor very successfully. We've got to a point where we believe, that it would be beneficial for us to go direct. That's a process that we've been undertaking, and we we've been recruiting and getting our own infrastructure in place so that when we went go, live in January, everything was ready and set.

27:00 And we were in a few weeks in, but it's all going very well. We're very excited by it. And, you know, we can really focus on transitioning that business across before we then focus on some of the sales opportunities that we see and start to grow our presence there greater. We're looking to do that in other European markets, and Austria is the next market that's been identified for us, and we continue to look at other opportunities we've got. But there are large untapped markets that are open to us that we're also looking at. So Japan is an example of this. Excuse me. TRISTEL's never been present in Japan. In fact, you know, none of our competition really has been, present in in Japan, and but there's still a need out there. And Japan is the third largest health care market in the world. They tend to be able to check pay a premium price for for medical devices. And so on face

28:04 value, this looks very attractive. It's always been scary from a regulatory perspective, but we've been investigating that market and creating a path forward where we feel that actually now is the right time to start to to look for commercial partners in Japan and exploit the opportunity that is there. India, another large market, that, on face value offers a lot of opportunity. TRISTEL has, tried over the last few years with distributors to get traction in that market. We now decided to take a slightly different tax, and that's by, recruiting, directly, with our own, people there. But, you know, we all know India's a very large market, and I I don't want to scare investors to think that we're gonna try and cover the whole of the Indian market.

28:56 In fact, we're taking a very small and targeted approach. So we're focusing on the cardiology ultrasound market. These are,

29:05 transesophageal echo, ultrasounds, that are used in cardiac surgery. This is the premium part of the market. Currently in India, they are using soaking technology. We've recruited two individuals from one of the largest, equipment manufacturers of cardiac ultrasound probes in India, and therefore, they come with extremely strong customer, relationships, deep knowledge of the market. And geographically, we're being very targeted. From a product segment, we're very targeted, or we feel that we can build and get some traction in the Indian market, in the near term, using them.

29:50 The Middle East continues to be, an area of the world where we're getting great growth and great success, and the team there are doing a great job. And in fact, in the second half of this year, we had great wins, in that region, primarily in Kuwait, where we've won two very large tenders, for the Ministry of Health, now. And that's a part of the world that we continue to see a greater adoption of our chemistry, and we'll continue to invest in, to get greater growth from. Latin America is a bit like Japan, an an area of the world that we've never been present in, and we feel that, that we have got some opportunities here. We've been investing a lot in, creating local clinical evidence.

30:36 That's something that takes time, but we believe,

30:40 that, you know, now is the right time to sort of, like, to explore the commercial partners, and to sort of drive our market entry. And then finally, we get to North America, which is our largest opportunity, and I'll now talk about that in a bit more depth. So over the years, ultrasound has always been the prize that we strive towards. It's taken us a long time to get there. We finally got our approval after a lengthy de novo process, and now it's about commercial execution.

31:14 On the face of it, royalties of £37,000 do not seem to be the sort of, like, something that we can really sort of, like, claim to be a great success, but we are encouraged by the traction we're getting in that market. It's a very large market, as I said. But, you know, that 37,000 actually translates through to 50,000 procedures. You know, what that shows is we are getting a presence there. We're getting

31:43 repeat use. We're getting a number of customers where the adoption is spreading, and that's where I really want to focus the investors' thoughts talk more about. But as Liz mentioned earlier, you know, normally, it takes us years to get guidelines to endorse our technology. You know? We spoke about Germany where those guidelines, you know, up until now, we've been present in the German market for a long period of time, like, well over a decade.

32:11 We've been present in The US market for twelve months now. And to already see the guidelines come out and recognize TRISTEL and actually have it as a recommended means of performing high level disinfection is a real feather in our cap and a real strong lever for us to drive, greater greater growth. And so, you know, everything we're seeing about the activity we're doing is really giving us a lot of confidence about The US market. Our partner, Parker Labs, has invested significantly.

32:43 They've they've they're keeping up with that level of of investment. They believe in the opportunity too, and we're seeing the actions that we're putting into place now accelerate the sales cycle. Our local team is working with them you know, side by side, supporting them, with regards to the sales calls, but also supporting them with regards to the sales management, you know, being present in their sales meetings, being present on regular calls to share best practice and drive our success in that market. So where are we at? Well, I made reference to the fact that we're, present in 200 health systems. Quite frankly, you know, the leads coming to us and opportunities is not not, a challenge. You know, we've got more, opportunities than we can deal with. What we need to do is really focus down on our land and expand strategy. And what do we mean by that? Well, we've been getting penetration into these health care systems.

33:45 But rather than skin the market, we want

33:48 them to fully adopt TRISTEL. Rather than TRISTEL be used on sort of a niche area of a few probes. We want to be used on all of their intracavity probes. We want to be used on their vascular access ultrasound probes as well, and that's what we've been focused on. And what we're hearing from those users is we are easier. We are faster. We are more user friendly. They love the fact that they don't they don't have to leave the patient room. Some of the feedback has also been about the fact that we're ergonomically, we're easier for the users,

34:24 and and we're seeing that now. So if I talk you through some of these examples, we just pulled out a a handful here. In Boston, we got initial penetration at one account, and they adopted us for their vascular access probes. Now that started to to to to spread. We're now being used in urology. We've been used in the ICU. We've gone from being present in one hospital

34:51 to now being present in four hospitals, And we're seeing that that penetration in that system not only come as a result of our, Parker sales efforts, but also organically as well. You know, the the physicians are talking to each other. They're they're, you know, praising our our products and our our chemistry, and that's spreading to wider use. In Orlando, we're seeing the same where we, you know, we, in a large health care system in in in Florida, Orlando, And, you know, after a lengthy, sales process,

35:28 we're now spreading adoption in their their outpatient clinics and are now going into their hospitals as well. At the same time as trying to get this deep penetration within the health care system, we recognize that, you know, we want to drive revenues as fast as we possibly can. So we have been working on some of the, private practices. Why have we been doing that? Well, when you're going into the hospitals, you have a very lengthy sales cycle. It's typically twelve to eighteen months. When we're going to these private practices, that sales cycle could be much shorter. It can be three to six months. And so we keep trying to get that good blend, but we are getting some good success in these private practices, and it's providing us with those, quick wins.

36:18 So that's encouraging. But as we focus on our success in in the ultrasound, what I want to leave you with is

36:26 this. Whilst 37,000 pounds sounds like a small number, when you translate that through to the actual number of procedures, that's 50,000, We are getting a lot of traction, and this is a flywheel. We will start off small. We will start off slowly, but it it is picking up pace. We can see on a monthly basis, the, sales are increasing, and we are very encouraged and also very bullish about our ability to get success and the opportunity, for, in The US ultrasound market. Switching gears, but staying within The US. Let's talk about ophthalmology, which is another area that is open to us.

37:12 This is a slightly smaller market. It's got 16,000,000 procedures, on an annual basis that we believe, would, require high level disinfection. That compares to the 50,000,000, in ultrasound. But this is a market that is more of a greenfield, that, you know, compared to the ultrasound market where you've got an established player. The ophthalmology market is more greenfield where they're typically using soaking technology or a very low level disinfection wipe to survive solve their needs. So it's an unmet need today. We applied for our five ten k clearance from the FDA, sort of, like, during h one, we got a request for some additional information.

38:07 That is not out of the sort of usual standard practice for the FDA. Typically, when they come back and ask questions, you hope that you already have the the data they want on file. But in this case, it did require us to do a little bit more of a a a clinical study in The US, so an in use clinical study. That's underway. We've been working with the FDA to to ensure that, you know, what we're doing will satisfy their request for information. And therefore, we feel confident that once we've completed that clinical work and presented the the the data back to the FDA, they will grant us with clearance sometime. Our expectation is that will be summer twenty twenty summer twenty twenty five.

38:57 What's our route to market? How are we gonna get success? Well, you'll notice in the in the presentation, deck, and, if you download it and look at it, after my speech, on the last slide, we, we do show a time, study that was performed in The US comparing standard practice, to our offering, and you you can see there, you know, the efficiency that we bring, and the reason why a customer will, want to be swapping to our, OPH products. But with regards to the route to market, we are looking at a a mixed sales model. And what do we mean by that? Well, for ultrasound, we use Parker Labs, and we chose them because they seem they are a perfect partner for the ultrasound market.

39:52 Parker is synonymous in ultrasound. It's very well known. They've got a a very high presence. They have existing relationships, and, you know, working with them meant meant that we weren't a unknown going to the market. But Parker is not focused on the ophthalmology market. This is this would be new a new ground for them. So we will continue to work with Parker from a manufacturing perspective. We may utilize them in some means as a nonexclusive distributor to, enable us for logistics and invoicing. But we will, work with some ophthalmology focused distributors.

40:38 So, you know, people that already have a presence in this market, but they will also be on a nonexclusive bay perspective. We want to retain a lot more control, as we go, forward, in The US with ophthalmology. And we have identified eight large hospital, users who are very keen to move forward with, our products, which we will manage directly with our own resources that are already present in The US market, and they will be our our people on the ground. And as we get success, we will invest further and and and create our own direct presence. But I don't want people to misunderstand me on the call. We're not gonna go out and recruit a a Salesforce from day one.

41:28 We're gonna be using distributors and our own presence we have and then build upon it as we get success and a very have a very targeted approach. But we look forward to getting the approvals, in the summer. We have learned from our what happened with the ultrasound approval. So what happened there was we were going through a de novo clearance. You know, you're not gonna sort of, like, do things at risk whilst you're awaiting a de novo clearance. This is the first in in time, in kind clearance. So what happened there was we got the clearance in June 2023. We didn't start manufacturing the product until sort of November later that year. And then, you know, we made Parker made investments in the sales team, you know, only post getting that that that clearance.

42:26 Because we're going down the five ten k track, you know, we have a much more defined path, and a defined visibility to get the approval, and therefore, we can start at risk to get ourselves ready, for so that once we get that approval, we can hit the ground running, and there isn't a substantial delay between approval, and commercial, operations. So in summary, the fundamentals of the business are very strong. We are profitable, cash generative, debt free, and continue to, pay a progressive, dividend. The opportunities are very clear in the medical device portfolio.

43:12 They are significant, and we remain, excited about the runway ahead of us in that market. The surface disinfection, as we, sort of, like, go forward, we are refining our commercial approach on some of the recent learning, but it's a large market. There are areas that really do value our premium offering, and we feel that we can get a very good return on our investment in those markets. Looking ahead, you know, we are continuing to unlock new geographies, and, you know, The US being the main one of those. But, you know, our growth will come from our existing, products in our existing markets, and The US will just augment that as we go forward.

44:02 So finally, the business is on track to its current, market goals, financial goals, and thank you for your time. That concludes the presentation, and we'll now open up for questions. Matt, Liz, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions, and you can do so just by using the q and a tab that's situated in the top right corner of your screen. Just while the company take a few moments to read the questions that have been submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Liz, at this point, if I could hand over to to read out the questions, that'd be great, then I'll pick up from you at the Okay. Thank you very much. We've had quite a few questions about tariffs in The US. So what effect will potential US tariffs have on exports?

44:50 Well, just a reminder to you that we the product is manufactured within The US. So predominantly, the the the revenues that the royalties that we receive will be totally tariff free, so we don't see that as an issue. In fact, it acts as a barrier to the alternatives, which are not manufactured within The US. So that's a positive for us. How have the Parker USA sales team been deployed, and what is the reporting structure for them? Well, they are deployed throughout The US. They are Parker's sales team and so they report into Parker management, but we do work very closely alongside them supporting them going on sales calls with them. So it's very much a joint venture for us out within within North America.

45:38 Next question. In the October 24 presentation, specific hospital groups were named as piloting TRISTEL products. What's the current situation regarding these pilot projects? Yeah. They they continue. As we said, we're sort of being used actively used in 200 systems. I think, what I really sort of like like to reinforce to the investors is, you know, we're being very focused. In fact, you know, we've identified seven health care systems that if we were to get full penetration in those seven health care systems, you know, the numbers, would just, sort of, like, blow away everyone's expectations. So, we continue to manage our pipeline very closely. We're we're on top of everything that's going on. We're tracking it. But, really, our focus is landing it's sort of expanding within those markets, those systems where we already have some traction already.

46:34 So, yeah, we're making good success and good progress in all the ones that we mentioned in September, October. Thank you. Next question. What revenues have been derived from The USA from July to December? Well, there's a table within the interim statement that you can see the exact breakdown of North America and The US itself with respect to royalties. Also, product which we have sold to Parker, which they then distribute out, and also Canada and Latin America. So you can find that detail within the r and s itself. Why is reported EPS falling? Well, EPS has been impacted by the tax rate, and this covers another question as well. The company has now, with the expiry of its patent for the use of a chlorine dioxide foam on a wipe, then that means that Patent Box has now been removed as a as a relief for us. And as a consequence, our tax our effective tax rate has fallen for or has increased from 10% up to 25%.

47:40 Now having said that, we continue to work on product development, and we do continue to apply for new patents and indeed extend the patent with respect to Trio, which is the the wipe system. So for now, we don't have that level of patent relief that we had in the past, but it certainly has helped us enormously over the years, and we will work to replicate that with with future products. What do you consider a safe level of cash for unexpected events, and what do you intend to do with surplus? Do you, Matt, have any plans for expansions, either bolt on or more strategic? Well, I'll answer the first part of that, which is to say that with our current current cash balance of 11,700,000, then we've got plenty of of comfort there.

48:34 Certainly, a a good half of that can be considered to be excess to our operational requirements. But I'll hand over to Matt for to talk to plans for expansions and bolt ons. Yeah. Absolutely. You know, we're always looking at what's the best deployment of our capital to, you know, give the greatest return to to our shareholders. So, you know, that's something we're always focused on. You know? Oh, as you can imagine, the business gets presented with opportunities all the time, and, you know, we we review them and and we make our decisions. We won't rule out anything right now, but I would just like to reinforce that, you know, we remain committed in to investing in in the business and and generating the best returns for shareholders we can.

49:22 Thank you. Okay. So next question. What is r and d spend as a percentage of revenue? Well, it comes in around the four to 5% mark if if we're looking at capitalized r and d. Of course, we can capitalize product development. Pure research goes through the income statements. And we do do a a little bit of that, but that's not included in that calculation, but would probably be another £100,000 or so. But it's sitting at the four to 5% mark. If your emphasis is on moving to direct sales, then how can you incentivize distributors in new markets? Absolutely. You know, in some some markets, it always makes sense to go through the model. Some some markets are lend themselves to be a distributor model. I you know, over the years, TRISTEL has worked with distributors and then taken the opportunity to go direct to his right.

50:16 This is something that, you know, we're not alone in doing. It's a it's a model that's used by many people around the world. So when we're working with distributors, they get excited by the opportunity of the TRISTEL offering, and we work with them to build the business up as best as possible. Then when we do decide to if we were to go direct, we obviously work with that distributor at that time. So it's something that we we do hand in hand, but the the the focus has always been and always will will remain on getting traction in those markets and getting success. Okay. Thank you. So we have two questions left. So if you want to get any more questions in, then do it now. But to work through those two, do the competitive pressures mean that you lose greenfield contracts, or are you substituted?

51:05 I I wouldn't say that we are losing business. You know, it's just it's a distraction and and a frustration. You know? It's a frustration that you can get some small local players that come in and make claims which are quite fictitious, and you have snake oil salespeople out there, you know, sort of, saying like, whatever they want to try and get the sale. And and we have to work hard to go into into those hostels and provide with the evidence and demonstrate that, you know, not everything is, you know, on face value, and you need to look a bit deeper. So, you know, I don't want to alarm investors and say that, you know, we've got we're losing business. That is not not the case. It's just a frustration that we have to deal with companies out there making claims that really they should be making.

52:00 Okay. And last question for today. Will your ultimate goal be to do your own manufacturing in The USA? No. I you know, partnering with Parker was, know, the best decision for the business. They they are they make you know, I'm trying to work think, but the volume that they're making with regards to ultrasound gel, they are extremely efficient. I don't think that's saying that we we could have replicated with a small, like, small manufacturing site in The US, and working with them was definitely the right right way forward. We have a a a sort of contract in place, which is you know, works very well for us, enables us to make a significant amount of profits in the in the local market. So, you know, it ticks all all the boxes.

52:55 Wonderful. I think that concludes our our questions. Perfect. Matt, Liz, thank you very much for answering the questions from investors. Of course, the company can review all the questions submitted today, and we will publish those responses out on the investor meet company platform. Just before redirecting investors to provide you with their feedback, which is important to the company, Matt, could I just ask you for a few closing comments? Absolutely. Well, thank you ever so much for attending and listening today. Let me leave you with this. TRISTEL has delivered a strong financial performance in the first half of the year with adjusted profit, before tax increasing 19% to 4.9%, supporting an 8% increase in our interim dividend. Looking ahead, we see significant growth potential in our core medical device business using geographic expansion as our primary driver.

53:43 And our largest opportunity remains The US market, and we are committed to, building upon that. We are confident in our ability to maintain and build on our current trajectory, leveraging and expanding our current global footprint and innovative product portfolio, and this business remains stronger than it ever has done. So thank you for your time. And, as you said, if you have any follow-up questions, please send them in. Thank you very much. Matt, Liz, thank you once again for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This may take a few moments to complete, but I'm sure we'll be 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, and good afternoon to you all.