Last checked at 6 Jul 2009 07:00
| Press Release | 6 July 2009 |
STM Group Plc
("STM", "the Company" or "the Group")
Trading update
Board Change
Appointment of Adviser
STM Group Plc (AIM:STM), the cross border financial services provider, announces a trading update for the first half of 2009, together with the appointment of Colin Porter to the Board and the appointment of finnCap as joint broker to the Company.
Trading update
STM's business is the custodianship and administration of clients' assets within a variety of entities ("wrappers"): including companies and trusts in various jurisdictions; pension schemes; unit-linked life assurance policies; and foundations. The Group's income is mainly derived from fixed fees and time based administration fees from each entity, with only a small minority of income, in the form of treasury management, linked to the underlying value of assets administered.
Core CTS division
The Group's core offering - the provision of corporate and trustee services ("CTS"), which accounted for almost two thirds of Group revenues during 2008, had a solid six months of trading in the face of difficult global economic conditions. The Group is pleased to report that the Gibraltar CTS division ("Gib CTS"), which accounted for 92 per cent. of the Group's 2008 CTS revenues, traded in line with expectations despite the sharp and unexpected reduction in treasury management fees which contributed approximately £0.6 million towards Group turnover and profits in 2008. STM is particularly pleased that this loss of revenue, driven by historically low interest rates and the withdrawal by clients of cash deposits, has largely been replaced by new client wins and higher activity of existing clients during the first half.
The Jersey CTS division, STM Fiduciaire, which comprises of two smaller acquisitions made during 2008, has, over the last six months, undergone considerable restructuring designed to enable further acquisitions to be integrated seamlessly into our new office. This project, as well as upgrading IT systems, has included the recruitment of a number of high quality directors. This not only provides additional potential fee earning capabilities, but also senior management for the ongoing acquisition programme to build up critical mass in Jersey. The short term effect of this investment programme together with the postponement by a small number of high net worth individuals in appointing STM Fiduciare has been that the Jersey division, whilst still profitable, has not in the first-half of 2009 generated the anticipated level of fees, However, the Group remains confident that these actions will bode well for the future financial performance, with only a six month delay in income growth anticipated.
STM Swiss, the Group's new Zurich based subsidiary office was established and recruited senior staff in the first quarter of 2009. STM has, for the last 18 months, been evaluating the Swiss market and considering suitable acquisition targets for the Group in this important jurisdiction. It has been and remains our intention to merge this office with an acquisition target, once a suitable target has been identified. The Board believes that Switzerland is one of the key jurisdictions for the administration and custodianship of clients' international assets and, with an imminent change in the organisation of the private banking sector, the investment made in this office should provide longer term benefits to the Group. As the decision to establish STM Swiss was only taken in January 2009, the set-up costs which have been expensed during this period were not included in the Group's 2009 budget.
Other divisions
STM's Insurance Management division ("FIM"), which contributed approximately 15% of the Group's 2008 turnover, has had a difficult first half, reflecting the challenging market conditions described in the 2008 final results. FIM provides specialist incubation and administration services to Gibraltar based insurance companies which, due to the lack of new clients coming through, driven by the scarcity of solvency capital for new ventures, is trading profitably but below management's expectations. The Group is taking initiatives to improve the situation, including sourcing solvency capital for new clients. There is no shortage of excellent business proposals from potential clients. However, they cannot proceed due to a lack regulatory capital and the Group believe there is an excellent opportunity to benefit from this.
STM Life, the Group's life assurance subsidiary that last year obtained a licence to write Class III linked long term life business, having experienced initial delays, is now making good progress following the appointment of a number of intermediaries and an experienced managing director. The Group remains confident that STM Life will make up a first-half shortfall in revenues during the remainder of 2009. All costs associated with the establishment of STM Life have been expensed in the first half.
Trading in the remaining divisions of the Group, including the Pensions division, Taxation Advisory and STM Nummos - STM's Spanish office, has been, in aggregate, broadly in line with expectations, although the taxation advisory side has been adversely impacted by the restructuring of its management team in the first half. However, with the appointment of an extremely experienced managing director form January 2009, the Group anticipates increased revenues in the second half of the year.
Financial position
There was good cash collection across the Group in the first half and the Group's balance sheet remains strong, with no external borrowings other than the bank loan for STM Life, and a current cash balance of more than £4.0 million.
Appointment of Director
STM Group today announces that Colin Douglas Porter has been appointed to the Board of the Company as Chief Operational Officer. Colin (aged 45), who joined STM as CEO of the Gibraltar and Jersey offices in June 2008, brings with him a wealth of experience in CTS, having previously held senior positions at The Amicorp Group and Equity Trust. Colin is a Barrister and Solicitor of the High Court of New Zealand and was admitted to the bar in 2000. He also holds a double major business degree in Finance and International Business.
Colin has been instrumental in implementing the restructuring plans in Jersey and continuing to improve the systems and methodology in our core business units over the last six months and we look forward to benefiting in the future from these changes. Colin has numerous current and previous directorships, by virtue of acting as a CTS director for a number of years, and the list of such current and past appointments is included in a separate announcement made today. Colin has a beneficial interest in 262,613 ordinary shares of 0.1 pence each in the Company representing 0.6 per cent. of the Company's total voting rights.
Appointment of Joint Broker
STM is pleased to announce that FinnCap has today been appointed joint broker to the Company. Finncap will work alongside Evolution Securities, the Group's existing broker and nominated adviser.
Tim Revill, STM's Chief Executive Office commented:
"The first half of 2009 has been one of consolidation and restructuring for the Group, which gives us an efficient and scalable platform upon which to grow. The Group's core business as a CTS provider remains robust, despite the wider economic difficulties and, whilst we're disappointed that the Jersey office and FIM are currently trading below expectations, our new projects such as STM Life and STM Swiss should begin to provide material returns during the second half of the year. The Group's cash position remains strong at more than £4.0 million enabling STM to continue to seek out suitable strategic and earnings enhancing acquisitions. Further announcements regarding the continuing buy and build programme will be made in due course."
- Ends -
For further information, please contact:
| STM Group Plc | |
| Tim Revill, Chief Executive Officer | Tel: 00 350 200 51610 |
| tim.revill@stmgroupplc.im | www.stmgroupplc.com |
| Evolution Securities | Tel: +44 (0) 20 7071 4300 |
| Jeremy Ellis / Chris Clarke | www.evosecurities.com |
| FinnCap | Tel: +44 (0)20 7600 1658 |
| Tom Jenkins / Marc Young | www.finncap.com |
Media enquiries:
| Abchurch | |
| Charlie Jack / George Parker | Tel: +44 (0) 20 7398 7719 |
| george.parker@abchurch-group.com | www.abchurch-group.com |
Notes to editors
STM was formed in 2007 specifically to become a leading financial services group operating in the Corporate and Trustee Service Provider (CTSP) sector. The Company listed on the AIM market of the London Stock Exchange in March 2007. The traditional business of CTSPs is to administer and manage personal, family and commercial assets and income streams in tax efficient jurisdictions. The Company's aim is to grow through acquiring and consolidating high quality existing CTSPs which offer complementary products and services and that operate in complementary tax efficient jurisdictions to those provided by STM's first acquisition, the Gibraltar based CTSP, Fidecs Group Limited ("Fidecs").
Fidecs is the second largest financial services firm in Gibraltar and employs over 101 people. It specialises in financial planning for both High Net Worth individuals ("HNWI") moving to work, living or retiring overseas or making cross-border investments, and for entrepreneurial, predominantly, owner-managed businesses, expanding into or re-locating to other, frequently lower tax, jurisdictions. It also includes an insurance management division, specialising in providing set up and management services to newly formed insurance companies operating out of Gibraltar
In June and August 2007 STM acquired two Gibraltar based CTS providers, the Atlas Group of companies and Parliament Corporate Services Limited. These two acquisitions further consolidated STM's leading position in Gibraltar. The Group expanded into the Channel Islands in December 2007, with the purchase of Compagnie Fiduciaire Trustees Limited. In June 2008, STM increased its presence in the Channel Islands with the acquisition of St George Financial Services Limited. For the year ending, 31 December 2008, STM Group reported revenue of £9.19 million with pre tax profit of £2.84 million
The CTSP market is fragmented in nature, comprising a small number of very large international financial services groups and a large number of relatively small trust and company management businesses regulated by, and operating out of, a single jurisdiction.
Further information on STM Group can be found at www.stmgroupplc.com