Operator: At this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. I would now like to hand you over to Chris Lee. Good morning, sir.
Chris Lee: Good morning. Thank you. Good morning. Hi, my name is Chris Lee. I am joined by my colleague, Anna Wasyl, our CFO, and it is a pleasure to be able to present the Tristel PLC audited results for 2026. I would like to start by just drawing your attention to the disclaimer, which you can read at your leisure. While you are doing so, I would just like to tell you a bit about Tristel and what we do. We are a chemistry company who operates in the high-level disinfection space with a proprietary chemistry in chlorine dioxide. Our whole mission is to, using our powerful biocide and chemistry, prevent the transmission of microbes, either from an object or a person to another. As I am new to the business, this is my third month with the company, I thought I would just do a brief introduction of myself.
Chris Lee: I have been in the med tech space for over 35 years. I started my career at Johnson & Johnson, where I spent 18 years across multiple specialty segments, in Europe, the US, and Asia. I ended up my career there running the Escom franchise across Europe, Middle East, and Africa. Since then, I have worked in multiple SME type of organizations across the globe. My most recent one was the CEO of Summit Medical, which is a UK-based private equity-backed medical device group. This is also my third public company that I have worked for as a CEO or deputy CEO. I have extensive experience, particularly in the US, around customers, distribution models and channels, and leadership of teams. It is an absolute pleasure to be here as a member of the Tristel team.
Chris Lee: Although they are not my numbers, I am delighted to present what is going to be an outstanding set of numbers for the business. With that, I would just like to say that the board remains unchanged. Obviously, Anna joined the board a year ago, just over a year ago when she joined the business. I have just joined the board, and the rest of the board remains as it was previously, and I am grateful to them for their support and contributions to the business. I would like to hand over to Anna now, to talk about the financial performance. In doing so, I would also like to just thank the entire Tristel team for an outstanding contribution over the last 12 months to bring us to this point. Anna.
Anna Wasyl: Yeah. Thank you, Chris. Good morning, everyone. Let me tell you about a few financial highlights. Our Tristel team has delivered an amazing year with a double-digit growth, 10% growth in top line. Our revenues reached a record GBP 51.1 million and grew, across the world, in the UK, our home market, by 5% and overseas by 13%. Americas sales tripled, and of course, we will spend more time on these figures, in later slides. Our adjusted PBT grew by 15% to GBP 11.7 million, adjusted EBITDA to GBP 15.7 million, and we have reached a great, very high margin of 31%. Adjusted EPS grew by 6% to 18.19p. In terms of cash, our operating cash flow, reached GBP 11 million. It was up 8%, over last year and resulted in a GBP 16 million balance at the end of the year of cash and short-term deposits.
Anna Wasyl: We remain debt-free, and we are planning to pay the final dividend of 9.23 pence per share, which we will pay in December, of this year. That will mean that the total annual dividend will grow by 5% year over year. I will now spend a bit of time on key performance indicators, which show our continuous strong track record. This last year, again, as I have mentioned, we have grown 10%. This mostly came from volume. So GBP 4.3 million out of GBP 4.6 million of additional sales came from volume and the remaining bit from price. That means that we have reached 10 years CAGR of 11.6%. In terms of cash flow, I have already mentioned the figures on the previous slide, but what you can see here is this continuous strong growth, which gives us plenty of optionality for investment and progressive dividends going forward.
Anna Wasyl: Our profitability, very high with 31% of adjusted EBITDA remains very well, comfortably above our commitment of 25% margin. I will walk you through our summarized P&L, summarized income statement here. I have already touched on the top-line growth, but what I would like to highlight here is that actually the 10% growth, year on year looks even better when you look at the individual segments. Our medical device disinfection products grew by 11%, our surface disinfection by 27%, and it is actually our legacy product which decreased year over year. Our gross profit increased, so gross profit margin to 82%. That is reflecting the savings realized from bringing in-house the manufacturing of Trio Wipes, which was completed and announced previously and as expected, brought solid savings in the H2 of the year. Of course, we will continue delivering those going forward.
Anna Wasyl: Our gross margin for medical device disinfectants grew to 85% because of that project, and our surface disinfectant margins grew to 61%, mostly due to volume. Our administrative and distribution expenses grew by 8%, and this is largely driven by increase in employees with GBP 18.8 million of our staff costs. That is related to increase in headcount, and as we have announced before, we continuously invested in commercial expansion. So we have brought sales heads into the organizations and a few more sort of clinical-focused employees as well, and we will continue doing these investments in 2027. Our depreciation, amortization, and impairment line, you will see, has increased to GBP 3.5 million by 48%, and this is largely driven by one-off impairment of some of the intangibles related to surface line, and that was GBP 0.8 million. That brings us to adjusted profit before tax of GBP 11.7 million, which is a 23% margin. Very solid.
Anna Wasyl: Finally, the tax line. You will see here we have the tax expense has grown from GBP 1.8 million to GBP 3 million by 69%, and this is largely driven by two things. Firstly, by further reduction in patent box benefit and secondly, by reclassification of our RDEC. In the past, the R&D expense credit was recognized on the tax line as a reduced tax liability, and currently it has been reclassified since 2026 to other operating income, so above tax line. Since we consider that RDEC is not truly dependent on Tristel's actions and it is just dependent on HMRC policy, we decided to adjust it out from our adjusted profitability measures. I will move on to balance sheet KPIs, where you will see that our net working capital remains at very healthy ratios at around 15%.
Anna Wasyl: Over the last two years, as we grew the business in total by 22%, the net working capital only increased by 16%, releasing a lot of cash into the business. Our return on capital employed remains very robust at 27% in last year, speaking to our high operational performance efficiency and our ability to create long-term value for our stakeholders. Finally, our progressive dividend, which as I mentioned, will increase by 5% and reach 14.91 pence per share in the year. I have a balance sheet slide here, but to be honest, I will spend very little time on it because it really serves more as reinforcement that we have a very healthy and strong balance sheet, which remains debt-free. We have seen 25% increase in cash and short-term deposits.
Anna Wasyl: Our liabilities remain quite low, and this gives us plenty of capacity to support our planned investment and growth initiatives. I would like to spend a little bit more time explaining where the growth came from. UK, our home market, grew by 5%, but similarly to the group level, the growth has actually been better when you look at the individual segments. Our medical device disinfectants grew by 8% in the UK and 21% for surface disinfectants with the legacy products declining. When you look at Europe, Middle East, and Africa, the overall growth was of 15% to GBP 24 million, and that really came from a range of markets. Starting from Germany, which grew by 8% in medical device decontamination product despite emerging competition on the market. We go to Italy, growing by 16%, also in medical device decontamination primarily.
Anna Wasyl: That market grew significantly despite the fact that quite a few tenders have been delayed, which means that most of the growth came from increased adoption among our existing customers and moving the products to new departments such as ENT and cardiology. In Italy, we have also seen first signs of increased Duo ULT usage following the clinical studies and publications around HPV transmission with the use of ultrasound devices. That is really clearly an area where our strong cooperation with key opinion leaders and work on clinical studies helps us to raise awareness around these issues, and to really influence the clinical practice. If we move on to France, also grew double digits in both medical device and surface disinfectant.
Anna Wasyl: We have seen significant gains, especially in surface disinfectant portfolio, where we have seen in a few hospitals, where in difficult outbreak situations, our chlorine dioxide products really outperformed competition and allowed us to transfer the core surface disinfection practice to our product. Overall, we see that the surface disinfectant product globally has grown very strongly, and what we see there is that they differentiate very nicely, not only because of higher efficacy than competing products, but also because of simplicity of use. We have one contact time for all the different microbes, while competition refers to different contact times for different types of microorganisms, which in practice means that it is quite difficult to use the product to its full effectiveness. We are really happy with development there. Our Middle East team has also performed very well with 24% growth year-over-year.
Anna Wasyl: In APAC, we saw a similar performance to the H1 of the year, where it was quite a varied picture. In our mature markets, such as Australia and New Zealand, we have seen quite a flat performance over last year with some competitive headwinds in Australia. In New Zealand, the medical device decontamination portfolio actually grew slightly. However, the legacy product declined and sort of dragged the whole growth down. In Southeast Asia, Malaysia and Singapore grew very strongly, 21% and 16%. So very happy with that performance. If you look at Americas, finally. In Americas, we have reached GBP 0.8 million in revenues. I would like to spend a bit more time and explain the different revenue streams related to Americas segment. First is the direct US product sale.
Anna Wasyl: That is the line where our newly launched OPH product is reported, and you can see really great growth there. The GBP 340,000 is mostly consisting of the growth in OPH product. The second line, which is the royalties line, that is related to Parker's sale of Tristel ULT. So these are our royalties that we receive on that sale, and that of course, flows through our income statement at 100% gross margin. Our distributor sales in Americas, coming mostly from Canada and Chile, grew by 54%, and that overall meant that Americas grew 202%. Now I would like to pass to Chris, who will tell us more about the US performance.
Chris Lee: Yeah. Thanks, Anna. The US has been obviously one of the high priority markets for us, and there are two parallel segments we run in the US, one on the ultrasound business and one on the ophthalmic business, and I would like to touch on both for you now. With the ultrasound business, we obviously work with our strategic partner, Parker Laboratories, and our royalty income has grown to $355,000 in the last year. Procedures have grown from 300,000 in 2025 to 736,000 last year. So it is a very significant increase in the number of procedures that we are now having Tristel products used on. There are approximately 50,000 procedures in the US in this space, which just gives you some measure of the potential that we have ahead of us here.
Chris Lee: We are looking to see how we can exploit that further. The way the US works in this space is that new accounts start with small volumes as the investment-based clinical teams trial, develop training protocols, update procedures, and observe for competency and performance before they get rolled out. Then it becomes a management practice after that time for utilization. To give you a working example here, one of our biggest customers in Florida, had 10 user sites in 2024. There are now 33 user sites at the end of this financial year. A huge amount of work has been done obviously to drive adoption and growth in that particular institution. That gives you a sense of the time it takes for us to take an initial interest through to an exploitation of the technology across multiple sites in the hospital.
Chris Lee: What we have done in the last year is we have managed to increase our pipeline significantly. We added 190 new user sites in the last 6 months since the March report, which means we have now got 275 open opportunities in the pipeline with 175 in different stages of completing value analysis, handling trials, and implementing training. I am very excited and confident about the future of Tristel ULT in the US with Parker as our strategic partner over there. I am also encouraged by the feedback that we have had from our customers on the ground with the testimonials. You can read these at your leisure, but I think if I was to try and summarize what these customers say, the three themes that come out across the board here is, one is the convenience that Tristel offers them. Secondly, is the time reduction that it takes.
Chris Lee: Thirdly, is just that the impact it has on their systems, on their compliance, on the Joint Commission and the overall approvals makes this a very easy technology for them to adopt. We are absolutely delighted to receive these glowing testimonials from our customers. Now moving on to the OPH side, the ophthalmic side of the business, this has been a huge success for us in the last 12 months. If I look at the revenues here that have increased to $260,000, which exceed our initial expectations, with 111,000 customer procedures performed across this marketplace. A very successful increase with some very significant institutions, both eye institutes and major hospitals, who have adopted this technology, which gives us great encouragement for the potential for this product across the US.
Chris Lee: Again, the significant number of new accounts have been opened, 73 at year-end that are now using the product. We have 304 open opportunities with 207 at trial and evaluating, with 97 of those currently engaged. We have strong partners in Embark Eye Care and Keeler, and we are looking to add a further distributor to our ranks very shortly, who will be very much focused on the government opportunities around Veterans Affairs, and the military, which is another significant string to our bow that we are hoping to hopefully be able to open up. Just to graphically show you what that looks like for the business a year ago, this gives you a visual representation of where our live users were across the US and the pipeline that we have built behind us.
Chris Lee: If you now overlay what that looks like at the end of this financial year, you can see the huge increase we have had across both the pipeline and live users. This is largely as a result of the recruitment that we have undertaken. We have two new sales reps, one in the Midwest who has been with us for about 7 months now, and one on the West Coast who just joined recently. I draw your attention particularly to the Midwest, where you can see a vast number of new accounts that have been established or opened and more trials taking place. We can see directly the impact that our clinical specialists are having on the marketplace. We also have got more strategic partnerships with the device manufacturers, and we have now got compatibility with some of the major providers in this space.
Chris Lee: That also significantly helps us to drive adoption in this particular area. Finally, I just want to share a bit about the multi-center study that we have been carrying out, that we have been supporting to create best practice recommendations for reprocessing in ophthalmology. This study has now been complete, and the lead authors are looking for an appropriate place to publish this work, which again, I think will be hugely beneficial for us as we look forward to driving future growth in this space. Once again, some nice testimonials from very significant institutions in the US that have highlighted just how convenient it is for Tristel OPH to support the ophthalmic high-level disinfection opportunity at point-of-care use, which has not been available to the US before and gives us huge encouragement for this segment moving forward.
Chris Lee: With that, I would like to pass back to Anna, who will talk about progress made in a couple of the areas of the business that we have been focused on.
Anna Wasyl: Yes, I will tell you about some important developments. I will start with education. in July, we have launched Tristel Academy. Why have we done it? Well, we believe that buyers who understand our chemistry are our best defense against competition. Even though our chemistry is clearly extremely effective, it is very complex and it requires explaining. We have launched this academy as a virtual initiative to turn published studies, clinical studies, published articles into very specific practical guides for IPC leads, practical answers to questions they may have. It is not only about our chemistry, it is also about guidance, disinfection regulations, which are quite complex. We believe that by explaining and educating, we can truly build better understanding for why Tristel is the best product in the market.
Anna Wasyl: We have currently been live in 8 regions, but we are planning further expansion, and we have seen so far really great engagement. We see a lot of interest in the site, and we believe that this has been truly a very good step forward. Now I would like to present to you our new product, which is called UniFoam. That's a product addressing hospital drains. Hospital sinks and drains are now recognized as a major reservoir of bacteria and drug-resistant bacteria in hospitals. Why is that? Because there is biofilm forming in drains, which is sort of a protective slime layer that allows the bacteria to live and thrive, and which makes it very difficult for chemicals to kill them. It's not a theoretical problem. There are real-world consequences and outbreaks related to these bacteria living in drains.
Anna Wasyl: For example, if you just look at some of the UK headlines, there was an inquiry in Scotland related to infections in child cancer patients that were related to actually hospital drains. The UK Health Security Agency, which mandated reporting of drug-resistant organisms since 2020, has already registered 22,000 of such cases. The products that hospitals use today, there's a wide variety of things. There's chlorine, maybe peracetic acid, hot water, cold water, different measures, but they are really ineffective against biofilm. UniFoam, there is really a special proposition, quite unique because, of course, chlorine dioxide as a gas molecule, has a better ability to penetrate the biofilm and kill the bacteria. It's a product which key opinion leaders have been asking for a while.
Anna Wasyl: Here you can see Dr. Phil Norville and Jim Gerry, who are some of the very recognized voices in the UK in IPC community, really asking for a product which could be used consistently to make a difference and prevent the creation of biofilm or destruction of the ones it builds up. Therefore, we are very happy that we have done a soft launch of the product already in September in UK conference for IPC, the IPS Conference leads. We've seen great interest from customers there with 14 NHS trusts registering for trials just on this conference itself. The trials are ongoing. We believe that in January, we will bring to the market the first phase market of a few core European markets and the UK.
Anna Wasyl: The product will be launched then, and then, of course, as the registration and regulatory approval continues, it will spread to more countries. Finally, I would like to spend a little bit of time on 3T. You have seen us present it before and what has happened there. The product has really developed tremendously in the last year. As you know, hospitals have had to evidence their decontamination process for years, especially in the UK, especially some markets. We believe that they've obviously found a way to log it, whether it's a manual log or digital log. We think that just offering a digital log is not enough anymore to be a true differentiator. That's why 3T is aimed at becoming more of a real virtual member of the IPC teams. What does it do?
Anna Wasyl: Well, it allows to not only train and certify staff, but it also allows to verify that the right product is used on the right device, that the product hasn't expired. It enforces the steps of cleaning and decontamination, and it can also track devices through its life, and finally provide IPC leads with not only ability to monitor how different users disinfect and how the devices are disinfected, but also can provide dashboards and reports that they may want to use as preparation for audits. Commercially, this is really important for us because as the compliance of the hospital rely more on 3T, it becomes harder to switch away from our chemistry as well.
Anna Wasyl: What we've done in the last year, as you know, in the Capital Markets Day in July 2025, we have said that we will launch the product in 2026, and we have done so. So end of June, we have gone live with the product, in the key markets that cover 80% of our current 3T usage. So that's UK, US, Australia, and New Zealand. Already now, the 3T is a product which is quite widely used. So it's used by more than 270 customers. Just in last year, a quarter of the decontamination cycles were logged in it, and more than 48,000 staff certificates were issued. We believe that now with the introduction of the paid tier, we will signal the value to customers. We will, of course, encourage daily usage that will bring reliance and that will really build the product loyalty as well.
Anna Wasyl: Finally, the multi-year subscriptions can actually help us contract, in a way, the customer to continue using our chemistry throughout the years that they're using the software. It's really kind of a reinforcing product. With that, I would like to pass back to Chris, who will tell us more about the outlook.
Chris Lee: Thank you, Anna. I think Tristel is in a fantastic place. Not only have we developed a proprietary chemistry, which underpins a great business that's been built so far, but we operate in a space that's highly attractive. If you just take ultrasound, as an example, a lot more of the ultrasound is moving to the point of care, well beyond what used to be all centrally reprocessed through imaging departments. There are more image-guided procedures being done with probes that need fast, compliant, high-level disinfection, either close to or at the bedside. All of that builds a bigger marketplace for us to play in. The other key significant thing is guidelines. Every time guidelines are altered or changed when chlorine dioxide or Tristel is named, that opens the space and the opportunity for us to grow our market.
Chris Lee: Just over the last year, we have had 3 more guidelines that have been released. We have had the American Institute of Ultrasound in Medicine, who have specifically mentioned chlorine dioxide, as an approved method for high-level disinfection of ultrasound probes. We have the American College of Emergency Physicians and the Society for Maternal-Fetal Medicine as well. Both of those have referenced chlorine dioxide as a technology for the disinfection of the space, and Tristel has been named specifically as well. These are all hugely beneficial for us, as we seek to expand and get adoption across the marketplaces that we play in. Infections remain extremely high profile. Ever since COVID, there has been a much greater awareness and knowledge around infection prevention.
Chris Lee: With the antibiotic resistance growing, with 1 in 6 infections now being resistant to antibiotics, it keeps compliance a real focus, and therefore guidelines changing contributes to our opportunity. We have also added a further 20 device manufacturers to our list of devices that have been approved for compatibility. So we now have 72 medical device manufacturers that we work with, and that relates to over 2,150 actual individual models of products, whether they are scopes or ultrasound probes, that have got compatibility with Tristel, which means the consumer, the customer, has got confidence that the product not only works, but is safe and efficacious to use. When budgets across many healthcare systems in the world are becoming tighter and more difficult, capital projects are becoming harder to find, and therefore point of care high-level disinfection is a very viable alternative that has been attractive to our customers.
Chris Lee: In terms of the outlook, I think we have got huge opportunities that we can focus on. We would certainly want to make sure that we exploit the significant opportunity in the US, where ultrasound and ophthalmology remain significant growth opportunities, not just this year, but over the coming years. We are looking to try and accelerate that, and put more headcount in to drive that growth as we move forward. In addition, we are looking at all of the markets that we currently play in to see whether, A, we can grow faster in the existing markets, or whether we can actually enter new markets that may take longer time because of a revenue perspective to enter. But ensuring that we have got medium to long-term growth opportunities around new markets that we enter.
Chris Lee: We would like to underpin all of that with a program of work that looks at Tristel having a clinical leadership position across the globe with key opinion leader engagement, podium presentations, and clinical support that wraps a halo around the business that demonstrates that Tristel is a significant partner in the infection prevention space, and that we are supported by the professional bodies, and by the clinicians who operate at the highest level within that market space. Within our existing opportunities with markets we currently play in, some analysis has demonstrated to us that there is a significant opportunity just by bringing all of our direct markets up to the median distribution of the number of products bought by customers. That would give us an opportunity somewhere in the magnitude of GBP 14 million, just by focusing on that piece.
Chris Lee: There is further opportunity, up to GBP 60 million, from our own internal benchmarks by looking at the markets that we operate in with a range of maturity levels if we were to focus on driving more revenue potential through existing customers. This is probably the fastest single way for us to grow the market alongside the new market expansion that will provide longer term growth and the R&D pipeline, which is something that we will be looking at for long-term growth potential organically. Anna has touched on UniFoam and 3T Pro. These are both new revenue streams that we are excited about. UniFoam is in a completely unmet space that has enormous market potential and opportunity, and we are very excited to see what that does.
Chris Lee: The development of 3T Pro has given us a whole new opportunity to both offer our customers additional features and benefits around not just compliance, but also education and learning, and also is a huge protective barrier for our business going forward. Finally, we would like to fuel our future growth by having a much more robust R&D pipeline and in that context, we are looking to put a team together that is much more connected, from a product development perspective, to our customers and to their needs and understanding, so that they can be translated through our development teams and our scientific teams to develop products that will give us a future pipeline of growth, both from our organic pipeline and from our existing portfolio.
Chris Lee: I think from terms of our financial commitments, I think we can firmly commit to the price quotes we made out to 2030 of revenue growth that is not less than double digit on an annual basis, an EBITDA margin that exceeds 25%, and currently is significantly above that, and a progressive year-on-year dividend growth policy. In summary, I think results remain in line with expectations and the business is firmly on track to meet its financial targets. We are committed to the US growth, both with our partners and with our direct, and are looking to put accelerated investments into that marketplace in particular, that will allow us to get there quicker than we have been able to achieve so far. But we are encouraged by the performance of the last 12 months.
Chris Lee: We expect to increase penetration across selected existing markets, and that our new product launches and our digital platforms will give us significant new growth revenues as well in support of that. All in all, I think Tristel is well-positioned to deliver long-term shareholder value. With that, I would like to say thank you very much indeed for your attention and for listening to our presentation today, and we will be delighted to take any questions you might have.
Operator: That's great. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab situated on the right-hand corner of your screen. Just while the company takes a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via investor dashboard. Paul, if I could just hand over to you just to chair the Q&A, and I will pick up from you at the end.
Operator: Thank you very much. Chris and Anna, we have a couple of questions pre-submitted regarding competition out there. How do you compete against trophon?
Chris Lee: Well, trophon and Nanosonics is clearly a very established competitor. But I think it is important to remember that it very much operates in the disinfection space in capital systems. They do not really operate or play in the manual high-level disinfection area. They continue to grow their business and help the industry generally by establishing disinfection across multiple sites in the hospital as the standard care and norm, and that compliance of that grows for all of us and grows for the market. We have had a lot of success with moving the high-level disinfection to the manual operation. Some of that has been at the expense of some of our competitors, but a lot of it as well is just bringing high-level disinfection to areas that were either employing low-level disinfection previously or not complying in any way before as well. I think there is plenty of room.
Chris Lee: It is a big enough market space. It continues to grow, as I alluded to, and we are very comfortable with the position that we have been able to achieve in the marketplace, and we will continue to focus on what we do really well.
Operator: What about other technologies? Ultraviolet lamps and other technologies regarding sterilization, are they beginning to impact you?
Chris Lee: Yeah, I think UVC, there is a lot of interest in UVC and the potential for these systems. But I think there are some well-known shortcomings that have been identified in studies that have been done with UVC. I think the jury is out, and there are a lot of questions remain just about the viability of UVC. Because inevitably, with these static systems, they cast shadows around the environment with which they operate, and it is very difficult to establish just how, in the real-world environment, how well they work and whether they are actually performing the task at hand. I think a lot more work needs to be done. We are certainly working on a lot of studies ourselves to show our efficacy and what we can prove with our high-level disinfection technology. We look forward to more evidence as that arises from that space.
Operator: You have had a bit of time to get your feet under the table. One of the questions is, have you identified anything, having come on board, that you would like to change or like to implement?
Chris Lee: I have identified two things that we are already doing that I would like to do faster and do more of. Those are that I would absolutely like to drive acceleration of the US opportunity. I think we have had a very encouraging year. Our confidence level in the ophthalmology business is huge right now, given the success we have had in the last 12 months. We are really looking to see how we can enhance the outstanding team we have got there in the US to drive a much superior performance. On the ultrasound side, I had a recent visit with Anna myself to the US and met with our strategic partner, Parker, there.
Chris Lee: We're absolutely aligned on the potential of the opportunity there and currently discussing ways we can drive growth across the board, both with additional clinical specialists, but also with a much more robust clinical platform to support the business going forward. That's one of my areas that I think we can really do more of. The second one relates to the second part of that, is that globally, we identified before my time that we should be a stronger clinical advocate for infection prevention and that Tristel is a leader in that space. We've hired a dedicated clinical director, and we've hired a team of clinical portfolio leads.
Chris Lee: Across that group of people, we'll be looking to connect much closer to the customer, produce more clinical evidence in support of infection prevention using high-level disinfection and chlorine dioxide, and also to get a much more prominent place at conferences, at meetings, on the podium, in presentations, in clinical presentations around Tristel and its overall performance and contributions to that area.
Operator: Thank you. A few questions on cash, so probably for you, Anna. It's not gone unnoticed by many of the investors that you've generated quite significant free cash flow in these set of results. So there are questions about what are you going to do with these cash reserves. The first question is, are you considering another special dividend?
Anna Wasyl: Yeah. As you said, we have closed the year with a record high balance in cash. At the moment, we really want to keep the optionality for our investment. We do have some needs around investing in commercial areas, as Chris has already mentioned, so increasing commercial plan in the US, increase in clinical outreach and engagement with key opinion leaders and clinical generation of clinical evidence. So that will be our key investment area. We will also have some need for CapEx going forward, and that would be related, for example, to UniFoam, our new product that I spoke about. We currently are planning to produce it on our existing lines, but of course, if the product is as successful as we hope, we will be investing in a separate line.
Anna Wasyl: And of course, there are other potential opportunities, but maybe, Chris, you want to mention a little bit more on your views as well?
Chris Lee: Sure. Yeah. I think one other obvious area is there is a potential for Tristel to engage with more M&A activity. Historically, we have had a track record of growing markets very nicely with competent distribution partners that we have then engaged and brought into the Tristel family. That has served us very well in terms of the growth we have achieved at this point in time. They remain an important part of our business going forward. But I think we will obviously have a diminishing return and a limited opportunity to be able to bring more of those on board. We would like to look at technologies that are either adjacent or in our space, whether that is chemistry or whether that is other products that would be additions and complementary to our portfolio. Or potentially even enhancing our market entry into certain tricky markets like Japan or China or Brazil, for example.
Chris Lee: Where we could get a better foothold quicker by making some investments in those spaces. We are actively looking to see what could be done at this period of time to complement all the other investments that we have touched on.
Operator: I think you have answered a couple of questions that we have already got on here. But there was a specific question about the priority of those. Are you able to give an idea of priority? Of course, as well as the word special dividend, buyback also comes up in many of the questions. Is there a way to prioritize at the moment and are buybacks on the table?
Chris Lee: So let me touch on the priority piece first, I will let Anna talk to the buyback. So yeah, the prioritization process, I am in my 10th week, I have had a chance to get around all of the business to speak to all of our teams. We are formulating a good idea and an understanding of where the opportunity lies for us. That is exactly what we are doing now, is doing that prioritization of those opportunities. I am absolutely certain that will incorporate more focus and attention around our existing markets where we think we have got significant opportunity for growth, both with our existing portfolio and those new products that we touched on. We will be looking how we can accelerate that growth in those markets.
Chris Lee: Clearly the US, the biggest medical device market in the world, with some of the most attractive prices in the world as well, we have made good progress, but we think we can do an awful lot more. So I would say those two are the most significant priorities, with thirdly making some bets around long-term market entry and building an R&D pipeline that gives us long-term growth.
Anna Wasyl: Yeah, I can address maybe the buyback part of the question. So of course, we get this question quite often from investors whether we are planning that. Some people may say that arranging for a share buyback actually sends a message that the management thinks the shares are undervalued, which we can definitely confirm that is the case. But on the other hand, it may also mean that we believe that we do not have a more attractive way of investing it ourselves that would generate even higher returns for shareholders. So, we believe that actually to be able to move a needle in terms of share price, we would need to spend significant amount of cash, that would really limit then our ability to have the options to invest. Actually, it is not even a given that the share price would be really impacted.
Anna Wasyl: We have a great example, actually, of our competitor, Nanosonics, that we referred to before also on this call. They have spent a significant amount of cash last year and this year on share buyback, they continuously run a share buyback program. Their share price currently is 40% below last year's. Why is that? Because the market values more the ability to deliver on the results on the guidance in line with expectations and deliver growth, rather than the share buyback itself. So, I think it really gives us a strong feeling that we need to invest in the business.
Operator: Thank you.
Chris Lee: I would just add, I accept the shareholder view that that capital deployment needs to take place.
Operator: Yes.
Chris Lee: That is absolutely uppermost in our mind of how we use those in the best possible way for shareholder return.
Operator: Another question comes back to the point you made earlier. Obviously, you were talking about priorities and about how investing in the US growth opportunity. There was a question here about would you add people in the US in the next 12 months, and would they be sales, or is that just Parker's job? Would you put more Tristel feet on the ground?
Chris Lee: We would do both. I think, yes, the ultrasound side is Parker's job. We have had a very open dialogue about how we grow that business faster. They are absolutely supportive and open to further investment, in particular around clinical specialists who can help drive adoption. I refer to my example area with the Florida institution where we built a very nice business across multiple user sites. We believe addition of clinical specialists would help us drive that faster, and that is certainly one of the areas that we are looking at. But also unquestionably the confidence we have in the ophthalmic opportunity. We are currently looking and surveying just how we can accelerate that with more both sales specialists, clinical specialists, and marketing support in order to drive that growth, even though we have already put three additional heads on the ground in the last 12 months.
Operator: Thank you. Do you mind if we stay on cash, Anna?
Anna Wasyl: Yeah.
Operator: In terms of cash reserves, how do you hold them?
Anna Wasyl: Yeah. We invest in short-term, medium-term deposits, so really kind of with different maturity dates. We really focus on our core business, so we do not spend time investing. It is not what we are paid to do. It is not our core competency. But we do make sure that we take advantage of the interest rates that are on the market.
Operator: I have a question from a shareholder just regarding the number of shares in issue. Could the management please explain the recent increase in shares outstanding and the reasons behind the dilution? How much of this relates to the employee share scheme, and what measures are being taken to limit future dilution and protect existing shareholders' earnings per share?
Anna Wasyl: Well, it is true that the number of shares in circulation increased, and it is driven by the employee share scheme. There has been an employee share scheme in place which was launched a few years back, and there is a couple more years that it remains valid where the longer-standing employees will still have a right to receive shares. However, we do not have a current new plan in place, so going forward, this dilution will decrease. That is really the main reason for the dilution that you have seen in the market.
Operator: Just a question regarding future expansion plans. As your products get stronger and worldwide markets are increased, would you have any consideration to manufacture directly abroad, or would you always continue to use companies who manufacture in country like you do with Parker Laboratories?
Chris Lee: The Parker Laboratories is a great example. I think it is a really great strategic partnership that works really well, where we provide the chemistry and the support, and the manufacturing assistance from the UK, but everything is done on site, including in this case, the commercial end of the operation as well. I think local expertise, manufacturing expertise is crucial in this situation, particularly when you are dealing with chemicals. At this stage, I think we are much more likely to enter into strategic partnerships and joint ventures than we would setting up Tristel-owned manufacturing operations overseas.
Operator: Yeah. Looking at the slide that you had regarding the Tristel Academy.
Operator: One of the investors suggests, does that slide mean that protection is needed against copycat competitors? Are there other competitors that would use chlorine dioxide chemistry?
Chris Lee: Yeah. I will address the second part.
Operator: Okay. Yeah.
Chris Lee: As of right now, we are the only player in the high level disinfection, manual high level disinfection space with the chlorine dioxide technology. A lot of work has been put in by the company to developing that over many years. We have a raft of patents, and an application that covers across multiple countries, and an awful lot of know-how that goes with that. There is nothing novel per se about chlorine dioxide, but the formulation and the way the company has managed that, makes it extremely hard to replicate. We continue to drive the outreach of that proprietary technology into the marketplace. That is not to say we are complacent. I fully expect there will be other parties who will try and enter this space, with a similar type of technology. But as of yet, we have seen nothing that exists in the chlorine dioxide space.
Operator: It is the wording on the slide, I guess, where it says about competitors are positioning lookalike products.
Operator: How much are you seeing that?
Anna Wasyl: Yeah. So there are other competitors, selling wipes. As Chris Lee said, none of them are reliant on chlorine dioxide chemistry. We have one example of a company in Germany that makes a lot of claims, claiming that their effectiveness is as high as our product. That is where we believe that it is really important to educate the customer on the strength of what chlorine dioxide brings.
Operator: Thank you. This is a great question, but I am not sure how easy it will be to answer or quick to answer. How do Tristel, Cache, and 3T fit together? What does this mean for Tristel's future strategic positioning and growth opportunities? Where does UniFoam fit in with that portfolio? What other innovations do you have around your core technology? It is a pretty broad question.
Chris Lee: Wow. That is a broad question. Let me try and address at least some of it. I think the medical device segment and the surface solutions segment, Tristel Surfaces solutions, are clearly two distinct areas of the business and have different focuses for us. I think the 3T technology fits extremely well into any space where compliance is required or where you need to record any kind of disinfection process or protocol that is in place.
Operator: Presumably, that is growing. There is more and more need to actually record it.
Chris Lee: Absolutely. Historically, that would have been either not recorded or would have been manually recorded, and we are trying to provide a very easy solution for our customers, not just to record traceability and compliance, but also to get other layers of features from that side that provide education and support beyond just the compliance piece. I think 3T, as an underpinning technology, sits nicely across that part of the business. The drains, the UniFoam product, absolutely firmly sits in the surfaces portfolio. Whilst you may not think of it as a surface being a drain, it absolutely sits in that portfolio and I think is a very innovative approach to addressing an unmet need that currently offers very little opportunity out there for customers to deal with that right now.
Chris Lee: I have huge confidence that that is going to be a significant project for us in our surface solutions portfolio as we move forward. It also, I think, has given us the encouragement to look further afield into surfaces where we think chlorine dioxide in particular can make a difference with new innovations. So that's the cut.
Operator: This is the question that was being asked was about future innovations. I realize from a competitive point of view, you do not want to say what you are doing before it launches, but presumably that is what you are looking to, is to have new innovations, new products coming out, investing in the next set of products that come out. I remember you saying earlier about when you are dealing with salespeople, they want to have new innovative products, so I presume there is a pipeline there.
Chris Lee: Yeah, absolutely. While I cannot talk about individual products, what I would say is that we have a highly talented team of scientists and development people internally, who are absolutely committed to bringing the next generation of Tristel products to market. What we have introduced in the last 12 months is a team of people that sit between that group and the customers, our clinical portfolio leads, who each own one of the segments that we operate in. Those people are dedicated to working with customers to translate ideas and unmet needs to our scientists and development teams in order that they can hone their expertise and skills to bring out more revenue products, to give us a much more robust pipeline so we can see more products coming through that pipeline over the coming years ahead.
Operator: A couple of more questions. One was regarding the changes in inheritance tax and the impact on AIM equities. The investor is asking, have you seen an exodus of private investors? Certainly from our experience as your PR/IR company, we have not seen that.
Chris Lee: Yeah.
Operator: Unless you've not experienced that, I don't think there's been any impact on your institutional shareholder base either as a result.
Chris Lee: Nothing ever that we've seen at this point.
Operator: Yeah. Thank you. Chris, the last one is, you've come in as the new Chief Exec. What is it that excites you the most about Tristel? This is the last question.
Chris Lee: Yeah. I'm absolutely thrilled to be here. I had a very high regard for Tristel and what the former leadership achieved and the business they built here around their proprietary technology. I think that excitement has only been increased tenfold over the last three months. When I look at the scale of the potential and the opportunities that we have, both in selling more of our existing portfolio across existing markets, entering new markets, and really extrapolating the value out of the US opportunity, I think all of those, they're endless. What we need to do is be very focused and strategic around the opportunities we go after, and make sure that we get the best return on our investment. I'm also absolutely blown away by the quality of the team we have at Tristel. The experience, the knowledge, the commitment.
Chris Lee: I have never felt more certain of a team of people who are motivated and driven to continue to drive the growth story forward. I am very excited looking forward to the next 12 months.
Operator: Thank you, Chris. Thank you, Anna. Chris, you may just be echoing very similar comments to what you have just said then, but in terms of, I will hand over to you for some closing remarks. Perhaps you could talk about your view of the results and the outlook, I will leave it to you to close.
Chris Lee: Yeah. Thank you. It is an extremely encouraging set of results. I think it builds on the platform and the financial commitments that we have made, I think it is just a huge endorsement of Tristel as a business and the space that we play in. I think it is absolutely clear as the business grows, it becomes more difficult to keep achieving those same financial metrics. We are working extremely hard as a leadership team and as a company to ensure that we make the right investments, that we use that cash that we have accrued wisely, that we give the shareholders the return that they expect, that we continue to see the growth trajectory of the business as we move forward over the strategic plan horizon.
Operator: Thank you.
Operator: That is great. Thank you for updating investors today. Can I please ask investors not to close this session, as you will now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I am sure will be greatly valued by the company. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to you all.
