Stm Grp. Share News (STM)

Cross-border financial services firm STM has blamed underperformance at its Jersey office and insurance division for a slump in profits during the first half of 2009.Profit before tax for the six months ended 30 June tumbled to £180,000 from £1.43m a year ago on revenue down to £4.13m from £4.26m.An investment programme and delays in confirmation of some big new assignments has left fees at the Jersey CTS (corporate and trustee services) division short of expectations.Meanwhile, potential clients and their professional advisers remain nervous about the economy, causing a slower than expected launch and take up of some of STM's new products, especially STM Life's unit-linked life bonds. Chief executive Tim Revill told ShareCast that STM underestimated the time it would take for the intermediary IFA network to understand, what it admitted was a complicated product, and get it past their compliance people. But one network has now passed it and the first bond has been sold in the past few days. Revill also explained that if you adjust for lost treasury management income, which accounted for £600,000 in the last full year and £450,000 in the first half, there's not much difference in the core business.The company has also incurred about £1m of one-off costs or costs that didn't happen in 2008, including £450,000 of admin expenses at STM Jersey.A 'brutal' reorganisation at the Jersey business, which involved getting in two new directors and upgrading support staff, was responsible for a first half loss, but Revill predicts a small profit there in the second half of 2009 and solid profits in 2010.'The first half of 2009 has been one of consolidation, cost cutting and restructuring for the group, which has resulted in an efficient and scalable platform upon which to grow," Revill said in today's interims statement.'Whilst we are disappointed that the Jersey office and STM's insurance division are currently trading below our original expectations, new product offerings such as STM Life and new offices such as STM Swiss should begin to make contributions to the group towards the end of the year, albeit at a slower rate than our revised expectations.'Revill said things have picked up in the past few weeks, with signs that normal activity is 'slowly resuming', although he's still cautious about an immediate return to previous levels of growth.The interim dividend stays at 0.2p per share.