Tristel (LSE:TSTL) — Preliminary results for the year ended 30 June 2024

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 they can be submitted at any time by the q and a tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received in the meeting itself. Have 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. I'd now like to hand you over to Matt Casoni, CEO. Good morning to you, sir.

0:30 Good morning, and welcome to everyone that's joined us online. It's an absolute pleasure to be presenting these record set of results this morning. I am joined by Liz Dixon, TRISTEL's CFO, and Heidi Allard, TRISTEL's chief financial controller. So let's get on with the results. Since we last updated our investors, there has been some notable changes, to the board, mainly, after thirty one years at the helm, having built a world class business, Paul Sweeney, TRISTEL's former CEO, retired, and I was delighted, to take over the business with such strong foundations.

1:23 At the same time, another executive director, Bart Lehman, also stepped down from the bar, from the board, but he, remains with the business, and is focused on driving forward our our French business. I wanted to really pass on my thanks, to Paul, and and to Bart for everything they've done to the business and for essentially handing over TRISTEL with such strong outlook for the business. Also as well, whilst we're on this slide, I should mention and update our investors that David Orr, who joined in 2015, is coming to the end of his nine year tenure, and David will be stepping down from the board at the forthcoming AGM later this year.

2:19 So as I said, I'm absolutely delighted to have taken on the role as chief executive as at the stage where the business is so well established with a global footprint, growing so strongly, and having so many exciting commercial opportunities ahead of me. I will obviously, take q and a's at the back of the presentation, at the end of the presentation, I should say, on my background and first impressions. But all I would say at this stage whilst we're on the slide is I have been so pleased with what I've encountered in my first seven weeks with the business. The team I'm working with is hugely talented, very engaged and motivated and aligned to driving the business forward and the goals.

3:13 The products themselves, the brands are well recognized around the world and really greatly appreciated by our customers, and they're differentiated and innovative as well. So we've established ourselves as a market leader. And as you'll see when we talk about the opportunities ahead, they are many great and very exciting. But let's first focus on these wonderful set of results from last year, and I'll hand over to Liz Dixon to take you through those. Okay. Thank you very much, Matt, and good morning, everybody. So I'll start with for those of you who are new to TRISTEL, a little description of our business. We are a global infection prevention company. We focus upon health care, so our business is done within the hospital predominantly.

4:01 And we we are we achieve our task of infection prevention using our unique proposition, which is our proprietary chlorine dioxide formulation. And we take that formulation, we place it into two different product ranges, two different brands, and two different areas of application. The first under the TRISTEL brand is, is used to decontaminate medical devices by hand. So the chlorine dioxide is put into foams and wipes and applied to, small handheld medical devices to reprocess them between patient use in order to protect patients from hospital acquired infections. We also take that same chemical formulation, and we place it into a product range that's used to disinfect to the highest level surfaces found within the hospital.

4:57 And looking at the next slide, we can see how we have multiple revenue sources within the hospital, even within those two different product ranges. So we follow the medical device that is shown here, and there's a list there of medical instruments. Our products are designed to decontaminate these devices, and they all hold the same characteristics, which are that they are semi critical. They're nonlumined, which means there's no channel running through them, they're heat sensitive, so they can't be autoclaved, and they are considered from a regulatory perspective of class two medical devices, and they're found throughout the hospital. We also use our unique chemistry to disinfect to the high standard all the surfaces both near the patient and also in public areas that are found within the hospital.

5:52 And depending upon which type of surface it is, the task is completed by either the nursing staff or by domestic staff, and our products are designed for use by both.

6:06 So our key achievements of the financial year that we're reporting upon were, first of all, as as Matt alluded to, another year of outperformance. Our results, once again, were ahead of market expectations. And being Paul Sweeney's, our company's founder, his final year at the helm, it's particularly fitting, I think, that this is such an excellent set of results. So we did create or perform a successful chief executive transition. Matt brings many skills to the board. He joined us on the September 2 and has spent a frenetic seven weeks learning about TRISTEL, traveling around the world, meeting our sales teams, meeting our customers, and sharing his experience, particularly within The United States with our board and with our senior team.

6:59 So he's already, adding value to TRISTEL. And, of course, we did report within this set of results the first revenues from The United States ultrasound market where there remains a substantial growth opportunity to TRISTEL. We've achieved those first revenues from our for for from The US from our TRISTEL Alt product, which received FDA clearance back in June 23.

7:29 And those first commercial sales occurred in late twenty twenty three and continued into the second half. And although we are stating within this set of results that the the contribution from The US is slightly behind the position that we hoped we would be in, we see that as a slight deferral of revenue, but certainly not a a reduction in the opportunity that we have laid out and described to our shareholders. So looking at the financial highlights, once again, the results are hitting record levels on all counts. So turnover increased by 16%. Adjusted PBT, and that's adjusted for share based payments, increased by 32%.

8:20 EBITDA by 21%. EPS by 44%. And we finished the period having grown cash from 9,500,000 up to 11,800,000 and still hold no debt on the balance sheet. We also increased our dividend by 29% in the financial year. Just as a a couple of pieces of information to to to hold, the ex dividend date for, this final dividend is the November 28, and the record date, November 29, and we're paying an 8.28p final dividend. And at a £4 share price, so I see we've dipped just below today, that's more than a 3% yield, which I don't think is bad for a growth stock such as as TRISTEL.

9:12 Good reason to invest, I would say. And today, the cash balance is sitting at 13,500,000. So we've grown since since the second since the June 30, which gives us the security for that progressive dividend that we are that we are paying. Moving on to operational highlights. Well, like we say, the first sales of TRISTEL PLC into The United States market has been achieved. And now that we've been selling in The US for a year, our view of the opportunity has not dimmed at all. We are continuing the North American regulatory strategy that we laid out to our investors back in June last year after our FDA approval of TRISTEL PLC.

10:04 And, we have now achieved a submission of TRISTEL OPH, a second indication for, The US. It's been submitted to the FDA as a a five ten k post year end, and we're expecting a an approval for that product using TRISTEL out as the predicate by Christmas this this year. We also are pleased to report the successful completion of The UK MDR and EU MDR certifications for our surface new a new surface product tank and pod. And so we finally have achieved despite several years of frustrations, we finally achieved the ability to place those products on the market.

10:54 And within The UK, our launch is well underway. And in Europe, we're now working our way through the the less time consuming local regulatory approvals that are necessary. So looking at our ten year sales growth record, financial year '24 delivered £5,900,000 of growth. This year, pricing gave us a bit of a boost and making up roughly half of the increase that we're reporting, and volume, of course, accounted for the other half. The graph shows the half one, half two revenue split for the year. At interims, we reported half one on half one growth of 20%.

11:43 And in and just to give a the the the missing piece of information there, half two reported half two on half two growth of 14%. But in fact, in value terms, the year that we're reporting upon was equal in terms of half one and half two in terms of actual revenue number. And we put that down to seasonality. So the Northern Hemisphere makes up 75% of our sales, where winter buying in preparation for high levels of infection gives a real boost to the October, November, December numbers. And as a consequence, we see a strong half one because of winter buying, and we see a strong half two as a consequence of growth. That's volume growth.

12:34 So looking at sales by geography, The UK has shown the highest growth year on year with an increase of 3,950,000, which is 32%. 1,100,000 of that 3.95 comes from volume and 2.8 from pricing. And the pricing has come from a contract that we've entered into with the NHS. It's a three year contract that we have we expect to be extended by the NHS for another three years. So we took advantage of a a long contract to put in a relevant inflationary increase based upon that six year period. So that's that accounts for the the price increase within The UK, but seeing at least a million pounds of volume growth from the market that we've been selling into for twenty plus years with this product set does demonstrate that we have not reached saturation point in our most mature market.

13:32 Constantly new devices are being found within hospitals that are relevant for decontamination by our products. And and the the use of a d sorry, of diagnostic devices within hospital is constantly increasing with population growth and and more advanced health care. So it's very exciting for us to see that within even The UK, we can achieve strong growth, even though we have such a high level of use of our products already.

14:07 In Europe, we've continued to see decent growth as well, so hitting percentages of between 816%, and we expect much more to come from from our European customers. Unfortunately, Apex was a little bit a bit disappointing this year, hampered by sales team losses. So we saw a drop in our or we lost a few members of the Australian sales team, but we are now back to full capacity out in Australasia. And so those issues have been fully resolved, and and we now expect to see growth return within Australasia. And looking at sales growth by portfolio and channel, then you can see there that medical devices grew by 5,500,000, which is an 18% increase, and services service sales grew by 3%.

15:01 The other line includes carriage and also third party products that sit neatly alongside our own infection prevention technologies, and they grew by 16% in the year. So we're growing on all levels here. And finally, of course, we've shown for the first time The Americas as a new geography and a new channel for us within using Parker Laboratories, our partner out in The US. And this is probably a relevant segue for me to hand the the mic back to Matt who can talk you through both the opportunity and the progress to date within North America. Yes. Let's focus on a little bit more on North America, specifically The US market.

15:48 You know, we don't need to be told how large the opportunity is in North America. And when you look and take kind of generic stats, The US medical device market represents 50% of the global opportunity. When we drill down into the numbers, we can identify 50,000,000 ultrasound scans that require high level disinfection only. And it's only recently that we've been able to enter this huge opportunity. Up until this time, the market has been dominated by one of our competitors, a company called Nanosonics, who generate circa 80% of their turnover from The US market. And if you look at their most recent figures, you can see that they have a penetration of about 30,000 units installed in markets, and that represents about 50% of the the total market.

16:46 When we analyze and look at our opportunity, we estimate that this, total, addressable market for high level disinfection, translates to a $100,000,000, per annum for Parker, our partner, of which we then get a 24% royalty. So it's been a long road to get us to the point of launch, and June 23 was a significant milestone when the business achieved a de novo approval from the FDA. Now one should not underestimate, how difficult it is to is to achieve and and the significant workload to get in a de novo first in kind approval from The US. So it's not like your standard clearance that you go through.

17:37 This is something far more rigorous. And saying, I've been involved with previous companies, and I can tell you those previous companies actually took longer to achieve than TRISTEL did. So that is that was a significant sorry. The slides are just jumping. A significant milestone for the business to to have done and say that should be celebrated. As we as as we look at the progress, the first half of twenty our financial year 2024 was about Parker manufacturing and starting the initial commercialization of the products. And the second half of the financial year was very much getting those initial sales and developing the pipeline.

18:31 You know, I am cognizant that, many a UK company have, failed to penetrate The US market. And then in my experience, what I've done with managing US sales teams, I've I've been that U UK business going direct to their own sales team. I've, up until very recently, have been managing a cell living in America, living in California, and managing a sales team out there. What I can say and what I do recognize is, you know, the the benefits the business has from partnering with Parker. Not only has Parker demonstrated their belief in TRISTEL by the significant investments they've made, expanding their sales team up to now, 10 people.

19:17 But, also, the Parker brand is synonymous with ultrasound. They are a well well respected brand within, the ultrasound community, recognized. And what that does mean and it gives us immediately is that kind of recognition and trust, and we get that positive aura that comes from working with them. They have been investing significantly in the business, in their marketing activities. And on this slide, you can see some of the things that they have been doing in markets supporting supported by the local, TRISTEL team as well. But the ultimate aim is, to sort of, like, build up awareness as we're new to the market and to build up that existing base of customers that can act as our testimonial.

20:09 And it's been great to see, case studies being written on us, in neurology. We have other case studies that will be published soon, which just endorses, the use of TRISTEL, and as a relatively new product to The US market, it sort of increases our confidence in the customer base, and our success moving forward. We have, working alongside TRISTEL invested. We have three full time employees that are based in Boston who are helping Parker on a day to day basis, answering questions about product compatibility, eco efficacy, for example. But and as Liz, has explained, you know, the the sales success we've had has been delayed.

21:03 Our opportunity, our optimism hasn't been diminished. We feel very confident but there has been a delay. And the reason for that is this increased bureaucracy with regards to the buying process. So I thought it'd be worthwhile putting this slide to, sort of help educate, to understand what's happening in the market. And this delay that we've seen is not a surprise to me. This sales cycle that we're experiencing and the hurdles we have to overcome to get the customer to actually purchase our product is nothing, unique to TRISTEL. There's nothing unique to Parker. This is just the way The US market is now, and and these sales cycles that we're showing for, like, the hospitals, for example, on the left hand side of up to eighteen months is the reality.

21:51 That's the way of doing business. There are more internal bureaucracy. There are more committees, that you have to go through. These value analysis committees can be done, either before, the evaluation, post the evaluation, the number of stakeholders getting involved, it's increasing. But the size of the prize and our ability to convert customers hasn't changed. It hasn't been being diminished. What we're also showing on this slide, though, is there are private practices, 11,000 of them in in The US, which are far easier. They've got a shorter sales cycle, but the size of the price is smaller. So we are attacking both sets of of markets, looking for those quicker wins as well as the the more significant hospital wins that will come with the future.

22:42 So to sort of give you some kind of indication as to our initial success and how we are doing, we put some some some some detail down. So let me explain the two

22:55 charts that you have on slide 16. The table is not showing all of our opportunities. It's just a few examples of customers which we've already converted. And what we're trying to show here is our ability to get initial penetration, but what the size of the prize ahead of us is. So what we have, if we take customer a, is initial, customer. It's about one hospital that started purchasing and using, TriStel Alt, but they are part of a much wider hospital system that involves 27 hospitals and 250 clinics. So that initial, per annum, royalty that we're able, to achieve, via Parker has the ability to be far larger as we expand within our initial successes.

23:49 And this comes down to what is best practice, what is, Parker's sales strategy, and what we're focused on is getting this initial success. But rather than getting a thousand small successes, what we wanna do is get fewer successes, but really expand within and turn those into, you know, small thousands of dollars into hundreds of thousands of dollars. And how you do that is by getting that one customer to start using the products. Maybe at first, they're

24:21 using it in urology or they're using it in the operating room, then their their adoption expands into other departments. Then you have the entire hospital, which is now being converted to to TRISTEL. And then from there, they are your internal advocates. They are your reference sites within the health care system that enables you to make significant leapfrogs in your revenues. You can go from having one hospital to whole house conversions of the rest of the health care system. And this is saying that I have done in my past. I know this works as a strategy, and this is something that we're indicating. And when you look at our pipeline we've been able to develop, okay, with these few examples, you could already see if we were to get full penetration, that represents $700,000, circa $700,000 of royalties for us. But beyond that, Parker have a full pipeline that are either in the trial stage or, have already posted trial stage where we're getting close to first purchases.

25:26 So I look at TRISTEL's opportunity in The US with a tremendous amount of optimism. I see our ability to already get some success. And as I look to the future, I can see how our pipeline is gonna really translate into fantastic royalties for the future. And then, obviously, as you get the success, as you get more reference accounts, as you get more established, your sales cycle speeds up naturally, and that's what we're focused on doing. If we then turn our attention to the ophthalmology opportunity in North America, and for those of you that follow TRISTEL, you'll be aware that we put out an RNS, recently, saying that we had submitted FDA clearance of our TRISTEL OPH products.

26:19 But when we look at this opportunity for TRISTEL, it represents approximately a third, with regards to high level disinfection procedures compared to urology so the, ultrasound. So still a very significant market, and one we look to get success in in the future. How are we gonna do that? Well, as I said, we have made our five ten k submission, in The United States. Because we went through the de novo process, we can now use TRISTEL ALT as our predicate device, which should means that we have a speedier path to approval. That can be a ninety day review time frame.

27:06 With some questions, it could be longer, but we are targeting approval by the end of this calendar year.

27:12 We have said here that, our distribution channel is, to be determined, and that's just simply us taking this opportunity, to assess the options we have, in front of us for commercial partners and decide what is the right route to market for this product. We've had this product approved in Health Canada for some time and have been getting success with a dedicated ophthalmologist

27:41 distributor called Inova Medical. And we're pleased to say that we now have 24 repeat users across Canada using this product. So there is lots of learning that we can take from Canada that we will apply to The US business. And as a final point, you know, just to remind our investors, Parker Labs will be our manufacturer of this product. For the Alt product, are our manufacturer and commercial partner, and we can we are assessing, as I said, our commercial options as to how we go to market with the OPH products, but the Parker Labs will be our manufacturer. If we turn our attention to another significant, opportunity, which is the surface disinfection, you know, TRISTEL's success has been applying its novel innovative chemistry in high profitable niches, and the surface disinfection is now becoming an attractive market because of the market, dynamics and the changes that we're actually seeing.

28:50 If we take, for example, NHS England, yep, the NHS England is looking at so not only address, cost savings, improved workflow, but has some significant goals with regards to sustainability, environmental goals. And today, they are using 30,000,000 chlorine tablets. Yeah. Chlorine is damaging, to the

29:16 clinical infrastructure. It is not meeting the efficacy demands of the hospitals, and they need to find an alternative to that. In the same way, NHS England is using 600,000,000 pre wetted plastic disinfection wipes annually, and then those wipes are not fitting into their sustainability goals. So just painting the picture here using NHS England, really, what I'm trying to say is our cash portfolio

29:46 that we have is addressing the needs of of those customers, but the opportunity is large and very exciting for us. However, that being said, I appreciate it's been a long road to get to where we are now, but now we do have our regulatory terrorists. As Liz said, our UK MDR, and our European, MDR. We're just going through some of the local registrations, but we have the portfolio now to be successful. So why would the customer want to swap to our products?

30:19 Well, it's very simple, as I said. You know, we are giving them a product that is convenient, simple to use, but also one that is meeting their demands. It meets all their efficacy, needs. It meets their environmental sustainability needs, and, is allowing them to adopt a technology that is gonna be transformational to what they're trying to achieve. So now it's about executing on our cash portfolio. We continue to invest in the business and have been very busy on some of our product development. I know that these have been presented to you before, but we have our free t platform, which is our IT app based train, trace, and test tool, which really is a catalyst on our medical device sales and and supporting our customers in what they need to do with regards to recording and auditing all of the steps of decontamination.

31:25 We're augmenting and working on putting, AI into the three t, which will be able to do that kind of verification and to, confirm that the steps have been performed correctly. And then on the color change technology, which is very exciting for us as a business, what we're really doing here is adding more value, in the same way as three t does, but this added more value. But this enables us also to upsell our existing customer base by adding this new step into their decontamination procedures. We, as you said, gained some more patents. They went to grants and continued to invest £90,000 into the business. So in summary, I am absolutely delighted to be chief executive of TRISTEL.

32:20 As I said, I've been here for three weeks sorry, seven weeks. As you can tell, I'm slightly jet lagged because I just came back from, North America. So I've been, with the the the team out there visiting, customers, and, working with our partner, Parker. And the foundations of the business are extremely solid as shown by our record financial results, and the outlook is the strongest it has ever been in our thirty year history. And as we've outlined in this presentation, there are many exciting opportunities ahead, and myself and the team are committed to deliver these for you. Matt, Liz, thank you very much for your presentation. What I'll do is I'll just bring your cameras back up now. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. Just while the company take a few moments to review the questions that have been submitted today, I would like to remind you the recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

33:31 As you can see, we have received a number of questions throughout today's presentation. And, Paul, if I could hand over to you to chair the q and a, that'd be great, and I'll pick up from you at the end. Thank you very much. We've had a few questions come through during the presentation, but also some pre submitted questions. So why don't we start with those? First of all, Matt, how, as chief executive officer, are you enjoying your new job? Yeah. Very much so. Very much so. It's been incredibly busy. I have been able to get out and visit customers, see our CRM team. We get to learn the business. As I just said, I've, just returned from, North America. I was in, Boston, New Jersey, and Chicago, sort of, like, sort of just arriving, yesterday back into the country. And what I can tell you having been around, sort of like The US, but also, other shows, and meeting customers, our brand recognition, what the customers say about our products is fantastic.

34:29 The needs that we are addressing is is is great, and, you know, I feel really delighted to be part of the business supported by a fantastic team of of individuals, and so encouraged by everything I've seen and experienced in my first few weeks with the business. Thank you. There was a question regarding a major patent that expires in 2026. What what happens next? Well, when the when the patent does expire, then we don't expect it to have very much impact upon the business. We view the IP that protects our technology as being multilayered, and the patent is only one element of that. The patent itself does not contain the formulation, and formulation is the most important thing when it comes to the manufacturing with the the chlorine dioxide, our proprietary chlorine dioxide formulation.

35:28 But and that's that pattern sorry. That formulation is under lock and key. There's only a handful and less than five people who have access to it. And but the the the the broader and more significant protections that we have come in the form of guidelines. So, for example, the ultrasound society of within The UK, their guidelines state that chlorine dioxide in the form of a wipe or a foam is an appropriate technology to be used to decontaminate the devices that that society is interested in. And there are guidelines for societies in many, many different clinical applications in many different countries and territories around the world. And we find ourselves, and we've worked hard to find ourselves, written into those guidelines, which could create a protection. It keeps us in, and it keeps others out.

36:29 In addition, we have over 2,000 material compatibility statements, which have been put together by the device manufacturers. So the likes of Siemens, of Karl Stortz, of GE, Phillips, they have tested our products, our decontamination products upon their devices to ensure that no damage is done to them in use. And within a hospital, because those devices are so expensive, the hospital requires those compatibility statements to be in place before that that device can be used. And it would take an incredibly long time and an and an awful lot of cost because we've been doing this for thirty years for a newcomer to take a a their own decontamination process and replicate that level of protection that we have achieved.

37:28 There are a few questions that have come in and maybe asking for forecasts. So I think you have to be, you know, obviously careful about what you say. But I think if you can give an idea, one of the questions from Terry, a shareholder, was was about the market share that you're targeting in The US over the five years for ultrasound. So that's one part of the question. And then the second is what's your plan to make that happen? Okay. Right. Well, obviously, we don't give out at this stage sort of a long longer range market share forecast. But what I can say is sort of I feel having sort of been out there talking to customers, incredibly encouraged by that. So, you know, where are we right now? We're getting our initial successes. We're getting our penetration.

38:16 We're a year behind where we wanted to be, but that's because of the, sort of, like, the significance of, like, sales cycle, that we've encountered the level of bureaucracy. So, you know, we still remain on track of what we want to achieve, and, you know, we are focused on helping Parker and assisting them to do that with this kind of land and expand strategy, which is gonna be key in getting that initial penetration, whether that be, you know, through, sort of like working in sort of the areas that we know that the hospitals are coming to us for. So let me give you an example. We've had a number of hospitals in The US reach out to us because we're meeting an unmet need that is not addressed by the TROPHON device.

39:03 So there are certain probes which don't fit into, those TROPHON machines. And therefore, what are they using today? They're using soaking. They're using, wipes in this effect. They know that they're, they need to adopt a technology. I was with a hospital, last week, so by a very, well well renowned, hospital, who, turned around to me and said, where were you two years ago? Yeah. Two years ago, they had just bought 10 TROFOR machines to address this need and sort of expand their high level disinfection. And they said, look. We needed TRISTEL two years ago. We are so pleased you are in market now, and I'm very pleased to tell our shareholders that that they are using TRISTEL now. So they are they have adopted the TRISTEL. They're expanding it through their hospital, and we're getting this initial penetration, and we're able to expand from that. So the future for us in North America is incredibly encouraging, and we will get significant market share in the years to come, I'm sure. There was a question from an investor, Hal, who asks, I think I think the question you've just answered, which was, you know, what is it that gives you confidence in The US market even if it is a slower than expected start? But it was all those elements you've just discussed. Yeah. Was all those elements you've just discussed. Also reviewing the pipeline with TRISTEL with Parker and looking at, you know, where we've initially

40:34 made the approaches, where we are in that pipe sort of in that getting them to conversion. Everything we're seeing is giving us that confidence that we will get success. You touched on it just earlier and and when you were discussing on slide 15 about purchasing bureaucracy. Yes. So you've had a few questions in terms of, you know, what that means. One of the shareholders says, you know, we all have probably experienced at one time or another in our careers, and we understand, you know, this kind of thing might be mean different things to different people. So could you just help them understand a bit better, specifically in relation to TRISTEL products, you know, what that bureaucracy is in terms of adoption in The US market? What are the factors? Yeah. Well, I think one of the first thing is that the hospitals really have sort of, like, cracked down on new products coming into their their facility.

41:25 The days have gone in The US where a clinician would say, I want that phone up purchasing, and they would order it straight away. So nowadays, they they put in variety of different processes, to control it. So as a completely new product, we are not on the hospital's system at all in any way or form. So there are the steps you have to go through in order to to get into the hospital system. At the same time, each of the departments are being pressurized on costs, for example, and therefore, they have their own, different committees to review, sort of, like, clinical, applications for an adoption of new technology. So we have to go through all these different steps. They are not uniform. So every hospital, every health system will have slightly different nuances about the way they approach it. But, essentially, the time it takes is what we've experienced and what, Park was experiencing. So this this is something that even, in my prior prior role working for Massimo, who in, The US had sales circa $800,000,000 and hundreds of salespeople, these the length of the sales cycle was exactly the same as what we're experiencing.

42:39 Sticking on the purchasing bureaucracy, one of the questions from Maynard was looking at the sort of America US sales in h one against h two, and it looks like it dips in h two. So maybe you could explain. They were asking the question. So has the bureaucracy suddenly happened, or perhaps you can explain about the initial stocking? Yeah. So so so, basically, it's essentially, what that is is that the initial stocking of the distribution chain and then now flowing through and starting to get those initial customer orders. So what's what's critical and and what we're working on is, you know, you get those initials from the customer, initial success, how does that turn from them ordering one or two cases of products to then ordering ten, twenty, and so on and build that customer base up?

43:24 There's a question that I I think it's in your slide, so it'll be a quick answer. But can you just quickly remind the investors of the sales based royalty revenue you received in The US in FY 2024? So it's on that slide. Yeah. It's on the geography slide. And we've got Slide 10. Slide 10. Thank you. So on slide 10, you'll see this annotation, an asterisk where we clearly identify the royalty income from North America of £75,000. I'll stick to questions on America. And, again, I appreciate it's difficult for you to give forecast. But on slide sixteen, one of the investors, Hal, has asked, you talk about reasonable US royalty revenue to TRISTEL in in can can we use that slide, slide 16, to give an idea of a ballpark for royalty revenue you expect in FY '25?

44:23 I I think the the better way to measure and the ballpark to use is to say, right, where are where are we? We're a year behind where we wanted to be. So what the numbers that we supply disclose to sort of investors with regards to where we want to be for for the year disclosed, Will we're expecting it as we enter into this year ahead. I would sort of like say that the information we put on slide 16 was more to be in indicative rather than sort of something that should be analyzed in in-depth. What we're trying to demonstrate here is if we take the table, for example, is just a selection, of some of the business we've actually won. So it's not the entirety of what we've, been been successful with, but it was just a selection to try and sort of, like, really get across that we're able to get some initial penetration from which we are then looking to expand.

45:17 And looking at that slide, Maynard asks, in terms of the North America sales opportunity slide, it seems to imply that each hospital has the same initial entry value of 3,744. That number appears or multiple of it. Why are the hospitals all paying the same amount initially? Well, so, basically, the way that that's worked is we've extrapolated some of the initial purchases and said, right. They're gonna have this annual volume. And then the ASP is pretty consistent based on which sort of distribution, partner, they're purchasing the product. So what you find in The US is you'll have, some rather large, significant, sort of logistics, distribution houses, the likes of Medline, Cardinal Health, for example.

46:07 And what we're operating is on a set price. So the customers buying via Medline, they're getting the same price. So you will have a that's the reason why you'd see that. So It's an average hospital. Yes. Exactly. There was also a question regarding whether there was anything more that Parker could do. Are there any levers that Parker might have to pull to alleviate or offset this purchasing bureaucracy? Are there are any strategies that you can undertake assuming royalty incentives are set are are set in their scope to use maybe as a master service agreement, or are you already doing that? So there are certain sort of, like, techniques and best practice, and, I've already met with the Parker team twice already, and been sort of laying out my experience and some what I've seen as some best practice. So let's just give a very practical example for, people this way. You're going through these different committees. You have the meeting scheduled. Sometimes it happens quarterly in some hospitals. Sometimes it's a monthly meeting.

47:10 But let's say you're you're you're on the the, the agenda for the quarterly meeting. That's your Your your opportunity. If you do not answer all the questions, if you do not be successful there or there's a reason for delay, you can lose three months a quarter by being, sort of pushed back. So what I've been, working, with Parker is to say, okay. What have we experienced so far? What are the things that are coming up? Or how are we, make ensuring that we have the full packet of information that is being supplied to those committees to ensure that we're not having any delays, and we're going through the process as smoothly as possible. The only other thing, you know, you can do is really work on having the strongest clinical champions on this on the site who are championing you your your offering.

48:03 And, you know, Parker has invested significantly in their sales team, also invested significantly in their marketing activities and getting the word out. And, actually, the demand that we are seeing initially and this pipeline we have developed is coming from the market to us. So it's not a push from us. It's a pull from the market, and we're we're working with those accounts because we are meeting some of their unmet needs. When I've been talking to the customers in The US, what I can see is they are you know, with they're using Tropon today. They have those, machines there, but the machine is down the corridor. It is maybe even a floor away. And what they're doing is they're having to disconnect these expensive probes, walk them all the way down there, put them into the TROPHON machine, and you go into the TROPHON room. And what you see there is basically a machine and then robe sort of like sort of these numerous probes hanging up on the wall.

49:08 And as you can imagine, this is extremely expensive and time consuming for the customers. What TRISTEL is offering them is be able to do, disinfection at the point of care and do it in a speedy fashion that improves and makes their clinical workflows more and more efficient. So that's why, you know, we're getting this strong pull from the market because there's this unmet need that we're able to address for those users. This is a a finance question. OpEx, including share based payment charges and depreciation and amortization, grew 19.5% this year Mhmm. Above revenue growth. Mhmm. Do you expect this trend to reverse going forward? Absolutely. I expect it to reverse. I think that we had a year of investment in the business, and and that was on on all levels. Certainly, the front end of the business with our sales teams and and and marketing departments.

50:07 We've had a lot of growth within those areas within The US, but also in the back office areas. So but product development, product design, r and d, they're all areas where we have invested, and we're investing for the future. We've got we've got many years ahead of us where we want to deliver growth. And to do that, we have to be well resourced. But I don't see that we will continue that level of recruitment certainly, in the current financial year or or in the next. So, yes, that growth will definitely slow. Thanks, Liz. Another question on price increases. Yeah. So obviously, you had some large increases in The UK, but across the group, what's a reasonable assumption for price increases for for full year '25?

50:53 Well, I think the the the most likely price increase that we will instigate is inflation. And, you know, we're we're we're settling down to 4% inflation, and that will most likely be the the increase that we implement from different points in time in different countries. But in January, in March next year, we will be implementing that that level of of increase. There's a question about one of your competitive technologies, a new technology. Germatec had its well, it's not new, but it's newly approved. Germatec had its ultraviolet light disinfection machine, the Cronos, approved by the FDA. Previously, you didn't seem convinced about UV being as an effective disinfectant at your interims. Yeah.

51:39 Have your views changed on UV, and and how much do you think this could disrupt US plans? You see, I I what I would point back to is why The US customers are turning to TRISTEL now. And and as I've just explained is that, you know, this situation they're faced with is in the hospital. Yeah. They have this room for the Tropon. They're having to disconnect the the pros. They're to walk it out. They're having to invest in more probes than they need, and these probes cost tens of thousands of dollars at a time. They're being tied up, and they're tying up clinicians and the health care practitioners to go do this this decontamination. That is no different whether it's a UV machine or a Tropon machine. Yeah. And and where we're getting success is because we are far more efficient to their clinical workflow. So I from my perspective, I don't see any increased threat from Germatec in, with regards to our our North American ambitions.

52:39 What I do see is, NanoSonics have increased competition. So those customers that are looking to replace their TROPHON machine now have an alternative. And and, you know, the classical saying that the, sort of the sort of the enemy of our enemy is our friend. But, you know, I'm not saying German tech is our friend, and I'm not, but I'm what I'm trying to say is here is, you know, I think I think for us, I see low little risk. For NanoSonics, I see increased competition. I've got questions from two investors, Philip and AJ, just about Asia and about your plans to address or sort of reintroduce growth maybe in China and Hong Kong. Seen a reduction in this area, but they surely you see potential there for growth. Absolutely.

53:25 Yeah. We definitely do. And so Lucy, who leads our our business there, is is very confident. In fact, the year to date on a local currency perspective, they are sort of showing significant growth, so that's very encouraging. So yeah. You know, as we said about Australasia, we now have a full sales team in place, and the team there is really working hard. They've they've got their focus and their pipeline that they're looking to develop and fulfill. So, yep, we appreciate that there are pockets that that sort of less success than we had expected, but that does not take away from the key point. And that is overall, TRISTEL has demonstrated record year on year results, there will always be certain parts of the business which are down, but the beauty of TRISTEL is that we're we're have such strong foundations and with such a global footprint that we can compensate for those areas should they have any weakness from a year to year perspective. In fact, overcompensates because the year is ahead. It's ahead of where we thought we were going to be.

54:34 It's well ahead of last year, and that's even with a little bit of a delay in The US. So the rest of world is really outperforming. Yeah. Absolutely. There is a question about the background, the Australian team departures, but I think probably for confidential staff reasons, it's it's not something to comment on. But I just wanna say nothing sinister there. It's just it's just the way teams happen. Yes. It's an ATV limit type of like. Yeah. There's there's a few questions on cache, your service products. So if I could turn to those, again, I appreciate about the expect giving specific expectations are difficult. But what would your expectations be for revenue in f y twenty five is one of the questions that investors asked. Well, I I think what I would just say is is that we have high expectations for cash. We feel very confident now we've got this more complete range with the with the MDR approvals in Europe.

55:31 And, also, we recognize that it's gonna be a growth driver for the business, so we're investing significantly to get that success. A follow-up question was just regarding whether there's a drag on the profitability because, obviously, gross margins are slightly lower on cash. Is there is there is that just simply because of low volumes? Is there you know, will that improve? Yes. Absolutely. So as we increase the volume of the cash products, then the gross margin will improve. Obviously, slow small runs result in less in a lower gross margin. And this is we expect this to be a high volume product. And as we increase those volumes, then the the gross margin will increase. Looking at the gross margin as a whole, it may or may not have picked up on the fact that we have moved some of our overheads up to cost of goods this year. There's some some production associated costs that now have become material, so they tick the balance and move up into cost of sales.

56:31 Notwithstanding that reclassification, the we expect our gross margin to to remain steady or even continue to increase because we have the offset of royalties from The US at a 100% margin against the slightly lower margin cash range. So we're we're very comfortable that our gross margin will remain at the the level that it's at. Staying on cash, the tank 10 meter surface cleaning system is now approved. It seems available for sale. Could you please give an idea of what hospitals would pay for a tank capsule equivalent to, say, 2,000 wipes, if possible? And also, you know, how many wipes a typical UK hospital would purchase every day or month or year? I don't think we can give you the exact pricing. That would be commercially sensitive.

57:20 But what we can tell you is how much hospitals do spend. So currently, the NHS spends £20,000,000 a year on pre wetted wipes, and and our tank system is going head to head with those exact pre wetted plastic wipes. So that gives you an idea of the target for us. And NHS England is very focused upon improving its sustainability profile. They've got very aggressive targets to reduce the use of single use plastics, and a plastic wipe is a single use plastic as much as a plastic straw is or a plastic cup is. And so us providing a a product which meets that exact requirement of the NHS whilst also, providing a a really positive economic advantage to, to our customers, which we will do with cash, means that we can be very optimistic about the take up of our tank and cash range.

58:25 Question again on cash. If being used in hospitals, would it also be used to clean surfaces and kitchens hospitals? And if so, does that mean you could expand into the food preparation market in the future? No. I I think I think, you know, focus is incredibly important for the business. Yeah? And that's how you get success is when you spread yourself too thin and try and sort of focus in too many other areas. And investors will note that, actually, if you look back at TRISTEL's history over a few years, what we've done is actually sort of streamlined our business from being sort of a bit more spread. And we are purely focused on the health care segment, and that will not change. Liz, probably one for you. In terms of the NHS, that inflation that the price increase over the long term agreements, can you explain how is inflation addressed in that? Was that just through that pricing? Just through that pricing. Absolutely. So we set the price that that that compounded six years of inflation. Okay. Other new markets, what about India as a potential market to enter?

59:27 Yeah. So sort of like in my experience, I sort like people were to note my CV. I've had a lot of experience in going sort of Indian and Chinese markets. I I sort of like some role I've done previously. So I recognize the the opportunity not just of India, but of all other of sort of, like, developing markets as a classified it's probably the wrong way of classifying India as a developing market. It's a very well established market. But that points that being said, yes, we are looking at geographical expansion. So, you know, it's a it's a opportunity for us. There are opportunities close to home, close to The UK, as well as looking at India.

1:00:15 It's it's being more successful in large markets like China, for example, so that remains opportunities for the business. A question that I thought might come up. You have a very high proportion of institutional investors. Mhmm. Are you worried at all about the possibility that the chancellor could remove tax advantages on the end market? I think we're all worried about that. If you're investing in AIM and I'm an investor in AIM as well, then, yes, absolutely. We are all concerned about that. There isn't very much we can do about it. I think that the the slowing down of the fall in the share price over the course of the last month demonstrates the concern in the market. Yeah. Let's all keep our fingers crossed. There's not a lot we can do. It's also worth noting for investors that Paul Swinney was quoted in the quoted company alliances white paper that was sent to the treasury talking about the importance of growth capital, long term investors in TRISTEL. But also, the other thing, I guess, that you want to mention is that you are a business that's well funded that has no cash requirements in terms of raising new funds. Yeah. Absolutely. Absolutely.

1:01:24 So yes. So we have we're highly cash generative. We've got a a significant cash balance held. And although we are returning cash to shareholders, it gives us that security over the the short to medium term. And a final question without disclosing anything that hasn't been released in your r and s. How has the first quarter gone? I I would say the the business is a a a growth business that continues to perform and exceeds expectations, and the first quarter would would be sort of, like, along those lines. Great. Thank you very much. Those are the the questions that we've received. And if I can hand over to you, Matt, to provide a short summary of of what we've just heard today. Yes. Well, so today, we have, announced record, results.

1:02:18 Turnover has gone up 16%. Adjusted, profit before tax has gone up 32%. Adjusted EBITDA, up 21%, and earnings per share, up 44. So truly fantastic results. As you can see, the business is on a very solid path. And as we outlined in our presentation, we have many exciting opportunities, whether that be geographical expansion into North America, the sort of, like, really consolidating and getting our regulatory approves on our surface disinfection. So as the new chief executive, I'm absolutely delighted to have joined the team, and, we'll be working hard to deliver, on the results ahead.

1:03:06 Matt, Liz, thank you very much for updating investors today. Could I please ask investors not to close this session? As you know, we automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This only 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.