Tristel buys Aussie rival Ashmed as it reports 'strong' growth

Hygiene product manufacturer Tristel on Thursday announced it has bought the business and assets of its Australian competitor as the group declared a special dividend after “strong” second half growth.

The AIM listed company said in a trading update it bought the business and assets of Melbourne based Ashmed Pty for AU$1.35m.

In addition to the AU$1.35m, the company will pay certain compensation payment for the repurchase of inventory and the company said the management team will remain.

Ashmed had distributed the company’s Tristel wipes system in Australia since 2011 and made about AU$3m from sales during the year ended 30 June.

Tristel expect the acquisition to improve its margins for sales to Australian hospitals and for it to be earnings enhancing. The acquisition should contribute incremental earnings of about £100,000 during the financial year.

The company said it does not have any debt and its cash balance was £5.7m compared to £4m in 2015.

A portion of the cash considered surplus is to be returned to shareholders. Tristel said a special dividend 3p per share is to be paid on 5 August. It last paid a dividend of 3p was in August 2015.

After the payment of the special dividend and payment of the acquisition, the company said it wants to retain cash reserves of excess £3m.

For the year ended 30 June 2016 Tristel had turnover in excess of £17m, up from £15.3m last year, and pre-tax profit, before share-based payments and unrealised currency gains of at least £3.1m up from £2.6m. The company said that both turnover and pre-tax profit were ahead of market expectations.

UK revenues in the second half increased by 10.4% to £5.3m. Overseas revenue in the second half of the year were up 19.4% to £3.7m.

In the second half of the year overseas revenue was 41% of the company’s total compared to 36% in the first half, and for the full year overseas revenue represented 39% of revenue.

Tristel aims to enter the US market and had a meeting with the food and drug administration in Washington in April. Following the meeting the company said it has multiple test programmes underway. The company is also pursuing registrations with the US environmental protection agency.

Chairman Francisco Soler said: "The company enjoyed very strong second half growth in both the UK and overseas compared to last year… The proportion of our revenues that are generated overseas continues to increase, and we intend to maintain this trend. I look forward to the group continuing its expansion in the years ahead and to providing further detail with regards to the United States regulatory project in October."

Shares in Tristel were up 10.22% to 124p at 1258 BST.