Infection control and prevention specialist Tristel (TSTL) said first half revenues from continuing operations fell 7% to £13.6 million, but pre-tax profit dropped 58% after the company incurred a £2.4 million non-cash charge in relation to discontinued operations, causing the shares to drop 13% to 363p.
The company’s non-core chlorine-dioxide product range had been in decline for several years and while it was cash flow generative the business had detracted from the core business profitability and growth.
The discontinued businesses achieved ‘substantially’ lower margins and would have required ‘significant’ investment without contributing to overall growth in revenues.
The decision to exit the legacy businesses clears the way for Tristel to focus exclusively on its core chlorine-dioxide technology sold into the hospital market.
Chief executive Paul Swinney commented: ‘The rationalisation of our business was substantially completed during the half, and we expect it to deliver faster top-line growth and higher profitability in the short and long term.’
Underlying revenues grew 5% to £14.5 million and adjusted pre-tax profit dropped 27% to £1.9 million. Revenues from discontinued operations fell 27% to £1.5 million.
ACCELERATED US PENETRATION
The company said it had made good progress in gathering data for its submission to the US regulator in regard to its DUO ULT product for ultrasound equipment and expected to file before the end of June.
In addition, Tristel made the decision to restart the state-by-state registration of its DUO product under USA EPA (environmental protection agency) approval.
Tristel believes this represents a ‘substantially’ expanded market opportunity alongside the FDA approval.
Looking forward the company said it was confident growth would return to pre-Covid levels of demand as the pandemic receded and the backlog for endoscopies and ultrasound scans returned to normal.
The half year dividend was maintained at 2.62p per share.
