Stm Grp. Regulatory News (STM)

18 January 2023

STM Group Plc

("STM", the "Company" or the "Group")

Trading Update

STM Group, the cross-border financial services provider, announces a trading update for the year ended 31 December 2022 (the "Period"), based on unaudited financial information.

The Company expects to report revenue of £24.1m, EBITDA of not less than £3.2m and PBT of not less than £1.7m for the Period.

The acquisition of the UK SIPP and SSAS portfolio from Mercer in September 2022 (the "Acquisition") is performing in line with management's expectations, having contributed £1.0m of revenue in the Period, although this is expected to be reported as £0.5m in order to align revenue recognition with STM's more conservative policy. The results also include £0.9m one-off non-recurring expenses in relation to the transaction and integration costs of the Acquisition, and headcount restructuring at plc and senior management level. Additionally, there is a £0.3m bargain purchase gain on the Acquisition. 

New business for the second half of the year remained steady albeit slower than anticipated, particularly within the personal pensions and life assurance business, and measures are being implemented to address this. The shortfall was partly addressed by the successful relaunch of our short term annuity product in the second half of the year which made a contribution of £0.8m to revenue, and will continue to make contributions in 2023.

The Company is in the initial stages of reviewing its three year strategy (the "Review") in conjunction with external advisers, with a view to realising embedded shareholder value. The purpose of this Review is to identify ways of improving the operating performance of the Group with the objective of delivering a clear growth strategy.

As part of the wider Review, the Board will consider the combination of the various businesses within the Group, as well as the Company's plans to move to an end-to-end, fully automated operating functional model, supported by third party technology.

An update in respect of the Review is expected to be presented at the time of the Company's 2022 final results. 

STM has a strong balance sheet to support its growth ambitions, with net cash at 31 December 2022 of £14.0m.

The Company has also made significant progress in its recruitment of a non-executive director and is expecting to make a further announcement on this in the near future.

Alan Kentish, CEO of STM Group commented: "Despite a solid addition by way of the acquisition of the Mercer SIPP and SSAS business, we have not yet delivered the revenue or operating efficiencies that we expected from the Group. This is partly driven by external macro-economic factors but equally some internal inefficiencies. We are seeing improving trends in the underlying businesses which is encouraging, however we want to ensure we are considering all opportunities to drive growth and efficiencies within our business.

"Nigel Birrell was appointed as Non-Executive Chairman in September 2022. Nigel has considerable experience in growing businesses and he has been instrumental in challenging our strategy. Our revised three year strategy will be based around delivering growth and driving shareholder value. We have a number of growth initiatives under consideration, and we look forward to updating the market in respect of the Review alongside our 2022 financial results. "

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (as it forms part of retained EU law as defined in the European Union (Withdrawal) Act 2018).

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Notes to editors:

STM is a multi-jurisdictional financial services group traded on AIM, a market operated by the London Stock Exchange. The Group specialises in the administration of client assets in relation to retirement, estate and succession planning and wealth structuring.

Today, the Group has operations in the UK, Gibraltar, Malta, Australia and Spain. STM has developed a range of pension products for UK nationals and internationally domiciled clients and has two Gibraltar life assurance companies which provide life insurance bonds - wrappers in which a variety of investments, including investment funds, can be held.

STM's growth strategy is focused on both organic initiatives and strategic acquisitions.

Further information on STM Group can be found at www.stmgroupplc.com