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Share Name Share Symbol Market Type Share ISIN Share Description
Stm Group Plc LSE:STM London Ordinary Share IM00B1S9KY98 ORD 0.1P
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Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 22.4 1.2 2.9 8.8 15

STM Group PLC Interim Results & Investor Presentation

14/09/2022 7:01am

UK Regulatory (RNS & others)


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TIDMSTM

RNS Number : 3466Z

STM Group PLC

14 September 2022

 
   14 September 2022 
 

STM Group Plc

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

Unaudited Interim Results for the six months ended 30 June 2022

and

Investor Presentation

STM Group Plc (AIM: STM), the multi-jurisdictional financial services group, is pleased to announce its unaudited interim results for the six months ended 30 June 2022.

Financial Highlights:

 
                             2022             2022             2021             2021 
                           (reported)     (underlying)**     (reported)     (underlying)** 
 Revenue                     GBP11.3m           GBP11.3m       GBP11.4m           GBP10.6m 
                        -------------  -----------------  -------------  ----------------- 
 EBITDA*                      GBP1.4m            GBP1.7m        GBP1.5m            GBP1.6m 
                        -------------  -----------------  -------------  ----------------- 
 Profit before                GBP0.5m            GBP0.8m        GBP0.9m            GBP0.7m 
  taxation ("PBT") 
                        -------------  -----------------  -------------  ----------------- 
 Profit before 
  other items 
  margin                          12%                15%            13%                15% 
                        -------------  -----------------  -------------  ----------------- 
 Earnings per 
  share                         0.62p                N/A          1.28p                N/A 
                        -------------  -----------------  -------------  ----------------- 
 Cash at bank                       GBP17.0m                          GBP16.5m 
  (net of borrowings) 
                        --------------------------------  -------------------------------- 
 Interim dividend                     0.60p                             0.60p 
                        --------------------------------  -------------------------------- 
 

* EBITDA is defined as revenue from continuing operations less operating expenses i.e. profit from continuing operations before taxation, net finance income costs, depreciation, amortization, and non operating items such as bargain purchase gains and gains on the sale of investments

** Underlying statistics are net of certain transactions which do not form part of the regular operations of the business as further detailed in the table below

Operating Highlights:

   --             Predictable recurring revenue remains a cornerstone of the business 

-- UK Corporate Pensions business revenues continue to grow despite "small pot" legislation having come into effect

-- Strategic partnerships continue to be developed in the UK, for example Options SIPP is partnering with IG Group to provide its pensions SIPP wrapper

-- The Mercer SIPP and SSAS acquisition recently completed, post period end, adds further scale to the UK offering, in line with the strategy, doubling the UK SIPP & SSAS business

   --             Further development of operating model to drive increased revenue growth 

-- Significant new business now being generated in H2 2022 from our niche annuity products

Commenting on the results and prospects, Alan Kentish, Chief Executive Officer, said:

"As previously reported, the first six months of the year have been slower than anticipated for new business, although both the pensions and insurance businesses show an uplift in revenues relative to the prior year comparable period.

"The completion of the SIPP and SASS portfolio acquisition from Mercer Ltd as well as the continued development of several strategic partnerships in the UK further augment the Group's UK focus and provide scale for further growth. Equally, the Corporate pensions business continues to grow despite changes in legislation coming into effect.

"Cost management and operating efficiencies remain key areas of focus for the Plc board.

"Further to the recently announced Board changes, I take this opportunity to express my thanks to Duncan Crocker and Malcolm Berryman who recently stepped down from their roles as Chair and independent Non-Executive Director respectively. I equally take this opportunity to welcome Nigel Birrell as he assumes the role of Group Chair and as independent Non-Executive Director, I look forward to working closely with him in the coming months.

"There remain a number of exciting opportunities which, albeit slower to come to fruition than we would have liked, makes us optimistic for the future despite the unsettled macro-economic outlook. In particular, our niche annuity products are now starting to produce significant new business."

Investor Presentation: 2.00pm today, 14 September 2022

The Directors will hold a presentation to introduce STM Group Plc to investors and cover the Interim Results and prospects at 2.00 p.m. today, Wednesday 14 September 202 2 .

The presentation will be hosted through the digital platform Investor Meet Company. Investors can sign up to Investor Meet Company and add to meet STM Group Plc via the following link https://www.investormeetcompany.com/stm-group-plc/register-investor .

For those investors who have already registered and added to meet the Company, they will automatically be invited.

Questions can be submitted pre-event to STM@walbrookpr.com or in real time during the presentation via the "Ask a Question" function.

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).

For further information, please contact:

 
 STM Group Plc 
 Alan Kentish, Chief Executive Officer                    Via Walbrook PR 
 Nicole Coll, Chief Financial Officer                 www.stmgroupplc.com 
 finnCap                                         Tel: +44 (0)20 7600 1658 
 Matt Goode / Emily Watts / Abigail Kelly-                www.finncap.com 
  Corporate Finance 
  Tim Redfern / Richard Chambers - ECM 
 
 

Media enquiries:

 
 Walbrook PR                  Tel: +44 (0) 20 7933 8780 
 Tom Cooper / Joseph Walker   Mob: +44 (0) 797 122 1972 
                                     STM@walbrookpr.com 
 

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

Chief Executive's Review

Overview

The first half of 2022 was slower than anticipated for new business, although both our pensions' businesses and life assurance businesses are showing an uplift in revenue compared to the previous half year position. Revenues from our businesses in Gibraltar and Malta remain consistent and in line with management expectations, but revenues in the UK SIPP business are behind plan as some strategic partners, whilst onboarded, have yet to fully roll out the product to their distribution network. UK Corporate pensions business revenues continue to grow despite the impact of the "small pots" legislation coming into force.

Recurring revenue, a cornerstone of our business, continues to hold up well and gives the predictability to build a strategy around organic growth. Like-for-like revenue comparison shows a steady uplift compared to the previous 2021 half year.

Operational expenses for the first six months were GBP10.8m (2021: GBP10.6m), broadly in line with management expectations, with overruns in certain businesses being compensated by savings in others. In relation to non-operational expenses, as classified as "other items" on the income statement, the non-cash item of amortisation of the client portfolios and IT development programs are higher than originally anticipated, leading to a reduction in the reported PBT number.

Optimisation of the operating model continues so as to improve efficiency and increase margins. This is primarily driven by the roll-out of our internal administration system and the automation of processes which will continue into the second half of the year, with margin improvements expected in second half year and into 2023.

Financial review

Financial performance in the period

The Group delivered revenue in the six months to 30 June 2022 of GBP11.3m (2021: GBP11.4m). The prior year included revenues from the Corporate Trust Services business of GBP0.8m which was disposed of in March 2021. Hence, on a like-for-like basis we have seen revenue growth of 7% across the pensions and life businesses.

Recurring revenues for the period have remained consistent whilst organic growth has been achieved in the UK Corporate pensions business and Gibraltar life business.

Profit before other items for the period is GBP1.4 million (2021: GBP1.5 million), with reported profit before tax of GBP0.5 million (2021: GBP0.9 million). During the period there have been a number of one-off and non-recurring costs such as costs associated with internal restructures. Thus, underlying profit before other items is GBP1.7 million (2021: GBP1.6 million) and underlying profit before tax of GBP0.8 million (2021: GBP0.7 million).

The reconciliation of reported measures to underlying measures is made up of items which are either non-recurring or exceptional and thus do not form part of the normal course of business. This reconciliation for all three key financial measures is shown in the table below:

 
 RECONCILIATION OF REPORTED TO UNDERLYING MEASURES 
                                        REVENUE         EBITDA       PROFIT BEFORE 
                                                                          TAX 
                                     -------------  -------------  ---------------- 
                                      2022   2021    2022   2021     2022     2021 
                                     -----  ------  -----  ------  -------  ------- 
                                      GBPm   GBPm    GBPm   GBPm     GBPm     GBPm 
                                     -----  ------  -----  ------  -------  ------- 
 
 Reported measure                     11.3   11.4    1.4     1.5     0.5      0.9 
                                     -----  ------  -----  ------  -------  ------- 
 
 Add: integration and acquisition      -       -      -       -       -        - 
  costs for H1 
                                     -----  ------  -----  ------  -------  ------- 
 Add: other non-recurring costs        -       -     0.3     0.2     0.3      0.2 
                                     -----  ------  -----  ------  -------  ------- 
 Less: gain on sale of investments     -       -              -       -      (0.1) 
                                     -----  ------  -----  ------  -------  ------- 
 Less: bargain purchase gain 
  and derivative asset                 -       -      -       -       -      (0.2) 
                                     -----  ------  -----  ------  -------  ------- 
 Less: effect of disposal of 
  Companies and Trust Services               (0.8)          (0.1)            (0.1) 
                                     -----  ------  -----  ------  -------  ------- 
 Underlying measure                   11.3   10.6    1.7     1.6     0.8      0.7 
                                     -----  ------  -----  ------  -------  ------- 
 

Cashflows

Cash and cash equivalents at 30 June 2022 were GBP18.1 million (2020: GBP18.3 million) with cash generated from operating activities being GBP1.2 million (2021: GBP1.2 million) thus exceeding our reported profit before tax.

Whilst cash balances have decreased compared to the same period for the prior year, they have remained fairly consistent since the half-year end.

During the period we also repaid GBP0.3 million of our bank loan with GBP1.1 million still outstanding. Net cash and cash equivalents as at 30 June 2022 was therefore GBP17.0 million (2021: GBP17.3 million). Whilst the Group had GBP4.4 million available in the credit facility as at the balance sheet date, this has been fully drawn down to fund the portfolio acquisition from Mercer that completed on 31 August 2022.

As would be expected for a Group which is regulated in several jurisdictions , a significant proportion of our cash balance forms part of the regulatory and solvency requirements. It is not possible to determine exactly how much of the cash and cash equivalents are required for solvency purposes as other assets can also be used to support the regulatory solvency requirement. However, the total regulatory capital requirement across the Group as at 30 June 2022 was GBP16.9 million.

The balance sheet also gives visibility of future revenue and cash generation and, in line with all administration services businesses, the Group had accrued income in the form of work performed for clients but not yet billed of GBP1.6 million as at the period end (2021: GBP1.5 million). This gives some visibility of revenue still to be billed and collected as cash at bank.

Additionally, deferred income relating to annual fees invoiced but not yet earned stood at GBP3.9 million (2021: GBP4.0 million). This figure also gives good visibility of revenue that is still to be earned through the Income Statement in the coming months.

Trade receivables as at 30 June 2022 were GBP3.4 million (2021: GBP3.1 million).

Dividend

I am pleased to announce that the Board has declared an interim dividend of 0.60 pence per share which is in line with the prior year. The interim dividend is expected to be paid on 16 November 2022 to those shareholders on the register on 21 October 2022. The ordinary shares will become ex-dividend on 20 October 2022.

Subject to trading continuing to perform in line with our revised expectations, the Board expects to propose a final dividend for the full year.

Review of operations

Pensions

The pensions administration businesses continue to be the cornerstone of our operations.

Pensions revenue for the period was GBP9.1 million (2021: GBP8.7 million) representing 81% (2021: 76%) of total Group revenues. Total revenue is split between GBP4.9 million for QROPS (2021: GBP4.9 million), GBP1.9 million (2021: GBP1.7 million) for the SIPP and SSAS businesses and a further GBP1.8 million (2021: GBP1.5 million) for the workplace pensions business. In addition, this year the Group also has a revenue contribution of GBP0.6 million (2021: GBP0.6 million) from third party administration and Group Pension Plans.

The recurring revenue percentage for this operating segment remains at 92%, and when combined with the relatively low attrition rates, remains a solid predictor of future divisional profitability.

Opportunities and challenges around the pensions businesses are focused on improving margins in the UK, as well as capitalising on volumes of new business from our strategic partners. Internationally, the focus is on increasing revenue through our occupational pension schemes for international businesses.

Life Assurance

Revenue for the combined Life Assurance businesses amounted to GBP1.9 million compared to GBP1.6 million in 2021. In a similar manner to the pensions operating segment, our life assurance business also has high levels of recurring fees.

Our flexible annuity products aimed at the UK market remain the key focus for sustainable organic growth within our life businesses. Conversion times for new business remain slow and unpredictable, and continued effort to expand our intermediary base is an important part of improving our new business numbers. In addition, the businesses are in the process of launching a suite of portfolio bonds for the UK market, which will produce a steady flow of new revenue, giving additional predictability to future organic growth. Distribution of these products will be via our strategic partners and thus additional costs for such products will be minimal.

Outlook

In the second half of 2022, we anticipate a healthy uplift in new business flow for our life assurance businesses in relation to certain of our annuity products, as well as increased new business flows for our SIPP business through our strategic partners; such an example being the recent announcement in relation to our partnering with IG Index.

However, a further benefit of our strategic partner program is that we anticipate that some of our other core products will also be made available soon via these platforms.

Having completed the acquisition of the SIPP and SSAS books from Mercer on 31 August, it is paramount that we integrate this business, and the staff, into our UK Options business in an orderly and efficient manner. The acquisition doubles our UK SIPP and SSAS business and will allow us to gain some benefits of scale. The team based in Cardiff is experienced and keen to bring its own new business relationships and opportunities into the STM family.

As previously announced, we anticipate the acquisition will generate approximately GBP0.87m in additional EBIT to STM's current UK business, Options, on an annualised basis, after a twelve month phased integration process. As a result of transaction costs of GBP0.3 million, and specific integration costs of GBP0.3 million, it is anticipated for the four months to 31 December 2022 that the acquisition will be a negative contribution of GBP0.3 million to the Group's result.

As we move forward towards the last quarter of 2022, we have made some significant changes within our board structure, as well as at subsidiary board level both at non-executive, as well as senior management level. All of the above is conducive to accelerating our revenue growth and improving our profit margins.

I look forward to updating the market with our progress in due course.

Alan Kentish

Chief Executive Officer

CONSOLIDATED INCOME STATEMENT

For the period from 1 January 2022 to 30 June 2022

 
                                                Unaudited   Unaudited 
                                                 6 months    6 months        Audited 
                                                       to          to        Year to 
                                                  30 June     30 June    31 December 
                                                     2022        2021           2021 
                                        Notes     GBP'000     GBP'000        GBP'000 
  Revenue                                 4        11,323      11,386         22,355 
  Administrative expenses                        (10,744)    (10,629)       (20,982) 
 ------------------------------------  ------  ----------  ----------  ------------- 
  Profit before other items                           579         757          1,373 
 ------------------------------------  ------  ----------  ----------  ------------- 
 
  OTHER ITEMS 
   Gain on disposal of subsidiaries                     -         120            219 
  Gains on revaluation of 
   financial instruments                                -         222            406 
  Finance costs                                      (99)       (152)          (330) 
  Movement on deferred consideration                    -           -            330 
  Impairment of goodwill                                -           -          (798) 
 ------------------------------------  ------  ----------  ----------  ------------- 
  Profit before taxation                              480         947          1,200 
 ------------------------------------  ------  ----------  ----------  ------------- 
  Taxation                                          (111)       (187)            542 
 ------------------------------------  ------  ----------  ----------  ------------- 
   Profit after taxation                              369         760          1,742 
 
 OTHER COMPREHENSIVE INCOME 
  Items that are or may 
  be reclassified to profit 
  and loss 
  Foreign currency translation 
  differences for foreign 
  operations                                           13        (37)           (33) 
-------------------------------------  ------  ----------  ----------  ------------- 
 Total other comprehensive 
  income/(loss)                                        13        (37)           (33) 
-------------------------------------  ------  ----------  ----------  ------------- 
  Total comprehensive income 
   for the period/year                                382         723          1,709 
 ------------------------------------  ------  ----------  ----------  ------------- 
  Profit attributable to: 
   Owners of the Company                              305         800          1,749 
  Non-Controlling interests                            64        (40)            (7) 
 ------------------------------------  ------  ----------  ----------  ------------- 
                                                      369         760          1,742 
 ------------------------------------  ------  ----------  ----------  ------------- 
  Total comprehensive income 
   attributable to: 
   Owners of the Company                              318         763          1,716 
  Non-Controlling interests                            64        (40)            (7) 
 ------------------------------------  ------  ----------  ----------  ------------- 
                                                      382         723          1,709 
 ------------------------------------  ------  ----------  ----------  ------------- 
  Earnings per share basic 
   (pence)                                5          0.62        1.28           2.94 
  Earnings per share diluted 
   (pence)                                5          0.62        1.28           2.94 
 ------------------------------------  ------  ----------  ----------  ------------- 
 

The results for the period from 1 January 2022 to 30 June 2022 relate to continuing activities. The results for the period from 1 January 2021 to 31 December 2021 include both continuing and discontinued activities (see Note 6).

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2022

 
                                          Unaudited   Unaudited        Audited 
                                            30 June     30 June    31 December 
                                               2022        2021           2021 
                                  Notes     GBP'000     GBP'000        GBP'000 
 ASSETS 
 Non-current assets 
 Property, plant and equipment                1,317       1,692          1,663 
 Intangible assets                           19,437      20,066         19,355 
 Financial assets                               881         697            881 
 Deferred tax asset                              76          85             76 
 Total non-current assets                    21,711      22,540         21,975 
-------------------------------  ------  ----------  ----------  ------------- 
 
 Current assets 
 Accrued income                               1,550       1,447          1,311 
 Trade and other receivables        9         6,549       4,019          7,699 
 Receivables due from insurers               24,130       3,600         24,130 
 Cash and cash equivalents          8        18,118      18,574         18,207 
-------------------------------  ------  ----------  ----------  ------------- 
 Total current assets                        50,347      27,640         51,347 
-------------------------------  ------  ----------  ----------  ------------- 
 Total assets                                72,058      50,180         73,322 
-------------------------------  ------  ----------  ----------  ------------- 
 
 EQUITY 
 Called up share capital           12            59          59             59 
 Share premium account                       22,372      22,372         22,372 
 Retained earnings                           14,734      13,836         14,429 
 Other Reserves                               (467)       (482)          (480) 
-------------------------------  ------  ----------  ----------  ------------- 
 Equity attributable to 
  owners of the Company                      36,698      35,785         36,380 
 Non-controlling interests                    (388)       (485)          (452) 
-------------------------------  ------  ----------  ----------  ------------- 
 Total equity                                36,310      35,300         35,928 
-------------------------------  ------  ----------  ----------  ------------- 
 
   LIABILITIES 
 Current liabilities 
 Liabilities for current 
  tax                                           786         890            640 
 Trade and other payables          10         9,325       8,081         10,532 
 Provisions                                  24,130       3,600         24,130 
-------------------------------  ------  ----------  ----------  ------------- 
 Total current liabilities                   34,241      12,571         35,302 
-------------------------------  ------  ----------  ----------  ------------- 
 Non-current liabilities 
 Other payables                    11         1,074       1,774          1,628 
 Deferred tax liabilities                       433         535            464 
-------------------------------  ------  ----------  ----------  ------------- 
 Total non-current liabilities                1,507       2,309          2,092 
-------------------------------  ------  ----------  ----------  ------------- 
 Total liabilities and equity                72,058      50,180         73,322 
-------------------------------  ------  ----------  ----------  ------------- 
 

CONSOLIDATED CASH FLOW STATEMENT

For the period from 1 January 2022 to 30 June 2022

 
                                                  Unaudited   Unaudited        Audited 
                                                    30 June     30 June    31 December 
                                                       2022        2021           2021 
                                          Notes     GBP'000     GBP'000        GBP'000 
 Operating Activities 
 Profit for the period/year before 
  tax                                                   408         947          1,200 
 Adjustments for: 
 Depreciation of property, plant 
  and equipment                                         333         369            659 
 Amortisation of intangible assets                      445         391            791 
 Impairment of goodwill                                   -           -            798 
 Taxation paid                                           35       (447)           (14) 
 Unrealised gains on financial 
  instruments at FVTPL                                    -       (222)          (406) 
 (Increase)/decrease in trade and 
  other receivables                                   1,150       (996)        (2,226) 
 (Increase) in receivables due 
  from insurers                                           -           -       (20,530) 
 Decrease/(increase) in accrued 
  income                                              (239)         291              8 
 Increase/(decrease) in trade and 
  other payables                                    (1,018)         817          (936) 
 Increase in provisions                                   -                     20,530 
 Net cash from operating activities                   1,186       1,150          (126) 
---------------------------------------  ------  ----------  ----------  ------------- 
 
   Investing activities 
 Disposal of investments                                  -       2,330          4,821 
 Purchase of property, plant and 
  equipment                                            (13)       (193)          (352) 
 Increase in intangible assets                        (527)       (546)        (1,032) 
 Net cash used in investing activities                (540)       1,591          3,437 
---------------------------------------  ------  ----------  ----------  ------------- 
 Cash flows from financing activities 
---------------------------------------  ------  ----------  ----------  ------------- 
 Proceeds from Bank loans                                 -         500            900 
 Bank loan repayment                                  (275)       (138)        (1,050) 
 Lease liabilities paid                               (473)       (437)          (469) 
 Dividends paid                             7             -       (505)          (861) 
 Net cash from financing activities                   (748)       (580)        (1,480) 
---------------------------------------  ------  ----------  ----------  ------------- 
 Increase/(decrease) in cash and 
  cash 
  equivalents                                         (102)       2,161          1,831 
---------------------------------------  ------  ----------  ----------  ------------- 
 Reconciliation of net cash flow 
  to movement in net funds 
 Analysis of cash and cash equivalents 
  during the period/year 
 Increase/(decrease) in cash and 
  cash equivalents                                    (102)       2,161          1,831 
 Effect of movements in exchange 
  rates on cash and cash equivalents                     13           4           (33) 
---------------------------------------  ------  ----------  ----------  ------------- 
 Balance at start of period/year                     18,207      16,409         16,409 
 Balance at end of period/year                       18,118      18,574         18,207 
---------------------------------------  ------  ----------  ----------  ------------- 
 

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY

For the period from 1 January 2022 to 30 June 2022

 
                                                              Foreign      Shares 
                                                             Currency      Based 
                 Share      Share     Retained   Treasury   Translation   Payments              Non-Controlling    Total 
                Capital    Premium    Earnings    Shares      Reserve     Reserve     Total        Interests       Equity 
                GBP000's   GBP000's   GBP000's   GBP000's    GBP000's     GBP000's   GBP000's       GBP000's      GBP000's 
-------------  ---------  ---------  ---------  ---------  ------------  ---------  ---------  ----------------  --------- 
 Balance at 
 1 January 
  2021                59     22,372     13,541      (549)          (60)        162     35,525             (445)     35,080 
 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 
 Profit for 
  the year             -          -      1,749          -             -          -      1,749               (7)      1,742 
 Other comprehensive income 
 Foreign 
  currency 
  translation 
  differences          -          -          -          -          (33)          -       (33)                 -       (33) 
 Transactions with owners, recorded directly in equity 
 Dividend 
  paid                 -          -      (861)          -             -          -      (861)                 -      (861) 
 Changes in ownership interest 
 31 December 2021 and 
 1 January 
  2022                59     22,372     14,429      (549)          (93)        162     36,380             (452)     35,928 
 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 
 Profit for 
  the year             -          -        305          -             -          -        305                64        369 
 Other comprehensive income 
 Foreign 
  currency 
  translation 
  differences          -          -          -          -            13          -         13                 -         13 
 Transactions with owners, recorded directly in equity 
 Dividend 
 paid                  -          -          -          -             -          -          -                 -          - 
 Changes in ownership interest 
 At 30 June 
  2022                59     22,372     14,734      (549)          (80)        162     35,398             (388)   (36,310) 
-------------  ---------  ---------  ---------  ---------  ------------  ---------  ---------  ----------------  --------- 
 

NOTES TO THE CONSOLIDATED RESULTS

For the period from 1 January 2021 to 30 June 2022

1. Reporting entity

STM Group Plc (the "Company") is a company incorporated and domiciled in the Isle of Man and was admitted to trading on the London Stock Exchange AIM Market on 28 March 2007. The address of the Company's registered office is 18 Athol Street, Douglas, Isle of Man, IM1 1JA. The Group is primarily involved in financial services.

2. Basis of preparation

Results for the period from 1 January 2022 to 30 June 2022 have not been audited.

The consolidated results have been prepared in accordance with International Financial Reporting Standards ("IFRS"), interpretations adopted by the International Accounting Standards Board ("IASB") and in accordance with Isle of Man law and IAS 34, Interim Financial Reporting.

3. Significant accounting policies

The accounting policies in these consolidated results are the same as those applied in the Group's consolidated financial statements for the year ended 31 December 2021. No changes in accounting policies are expected to be reflected in the Group's consolidated financial statements for the year ended 31 December 2022.

4. Segmental Information

STM Group has four reportable segments: Pensions, Life Assurance, Corporate Trustee Services and Other Services. Each segment is defined as a set of business activities generating a revenue stream and offering different services to other operating segments. The Group's operating segments have been determined based on the management information reviewed by the CEO and Board of Directors.

The Board assesses the performance of the operating segments based on turnover generated. The performance of the operating segments is not measured using costs incurred as the costs of certain segments within the Group are predominantly centrally controlled and therefore the allocation of these is based on utilisation of arbitrary proportions. Management believes that this information and consequently profitability could potentially be misleading and would not enhance the disclosure above.

The following table presents the turnover information regarding the Group's operating segments:

 
 Operating Segment             Unaudited   Unaudited    Audited 
                                 6m 2022     6m 2021       2021 
                                 GBP'000     GBP'000    GBP'000 
 Pensions                          9,072       8,690     17,597 
 Life Assurance                    1,910       1,638      3,402 
 Other Services                      341         284        582 
----------------------------  ----------  ----------  --------- 
                                  11,323      10,612     21,581 
----------------------------  ----------  ----------  --------- 
 Corporate Trustee Services            -         774        774 
 Total                            11,323      11,386     22,355 
----------------------------  ----------  ----------  --------- 
 

Analysis of the Group's turnover information by geographical location is detailed below:

 
 Geographical Segment    Unaudited   Unaudited    Audited 
                           6m 2022     6m 2021       2021 
                           GBP'000     GBP'000    GBP'000 
 Gibraltar                   2,976       3,172      6,099 
 Malta                       3,755       3.670      7,288 
 United Kingdom              4,251       3,822      7,952 
 Jersey                          -         445        445 
 Other                         341         277        571 
----------------------  ----------  ----------  --------- 
                            11,323      11,386     22,355 
----------------------  ----------  ----------  --------- 
 

5. Earnings per Share

Earnings per share for the period from 1 January 2022 to 30 June 2022 is based on the profit after taxation of GBP368,000 divided by the weighted average number of GBP0.001 ordinary shares during the period of 59,408,088 basic.

A reconciliation of the basic and diluted number of shares used in the period ended 30 June 2022 and 30 June 2021 is as follows:

 
                                            2022         2021 
 Weighted average number of shares    59,408,088   59,408,088 
 Share incentive plan                          -            - 
 Diluted                              59,408,088   59,408,088 
===================================  ===========  =========== 
 

6. Discontinued operation

On 23 March 2021 the Group disposed of its Gibraltar company and trustee services ("CTS") and tax compliance businesses. On 8 May 2021 the Group disposed of its Jersey based CTS businesses. These businesses were previously classified as held-for-sale and are now discontinued operations.

There results for the discontinued operation included in the six month period ended 30 June 2021 and the year ended 31 December 2021 are shown below. There are no results for discontinued operations included in the six month ended 30 June 2022:

 
                                           GBP'000 
 Revenue                                       785 
 Expenditure                                 (736) 
 Results from operating activities              38 
 Income tax                                      _ 
 Results from operating activities, 
  net of tax                                    38 
 Gain on sale of discontinued operation        219 
 Profit from discontinued operation            257 
----------------------------------------  -------- 
 

The profit from the discontinued operation is attributable entirely to the owners of the Company.

7. Dividends

The following dividends were declared and paid by the Group during the period:

 
                                                 Unaudited   Unaudited        Audited 
                                                   30 June     30 June    31 December 
                                                      2022        2021           2021 
                                                   GBP'000     GBP'000        GBP'000 
 
 0.0 pence (2021: 0.85 pence) per qualifying 
  ordinary share                                         -         505            881 
                                               -----------  ----------  ------------- 
 
 

8. Cash and cash equivalents

Cash at bank earns interest at floating rates based on prevailing rates. The fair value of cash and cash equivalents in the Group is GBP18,118,000.

9. Trade and other receivables

 
                      Unaudited   Unaudited        Audited 
                        30 June     30 June    31 December 
                           2022        2021           2021 
                        GBP'000     GBP'000        GBP'000 
 Trade receivables        3,421       3,077          3,921 
 Prepayments                723         581            508 
 Other receivables        2,405       3,962          3,270 
------------------- 
 Total                    6,549       7,620          7,699 
-------------------  ----------  ----------  ------------- 
 
   10.        Trade and other payables 
 
                                 Unaudited   Unaudited        Audited 
                                   30 June     30 June    31 December 
                                      2022        2021           2021 
                                   GBP'000     GBP'000        GBP'000 
 
 Deferred income                     3,869       4,014          3,579 
 Trade payables                        547         549            638 
 Bank loan                             550         552            550 
 Lease liabilities                     638         651            747 
 Contingent consideration               56         700            170 
 Other creditors and accruals        3,665       5,215          4,848 
                                ----------  ---------- 
                                     9,325      11,681         10,532 
                                ----------  ----------  ------------- 
 

The Company maintains a credit facility with Royal Bank of Scotland (International) Ltd for GBP5.50 million. The facility has a 5-year term with capital repayments structure over ten years and a final instalment to settle the outstanding balance in full at the end of the 5 years. At the period-end GBP1.6 million of this facility had been drawn down with GBP1.2 million outstanding. Interest on the drawn funds is charged at 3.5% per annum over the Sterling Relevant Reference Rate, with the undrawn balance charged at an interest rate of 1.75% per annum over the Sterling Relevant Reference Rate. The facility is subject to customary cashflow to debt service liability ratios and EBITDA to debt service liability ratio covenants tested quarterly and is secured by a capital guarantee provided by several non-regulated holding subsidiary companies within the Group and debenture over these companies. W hilst the Group had GBP4.4 million available in the credit facility as at the balance sheet date, this has been fully drawn down to fund the portfolio acquisition from Mercer that has completed on 31 August 2022.

   11.        Other payables - amounts falling due in more than a year 
 
                      Unaudited   Unaudited        Audited 
                        30 June     30 June    31 December 
                           2022        2021           2021 
                        GBP'000     GBP'000        GBP'000 
 Lease liabilities          273         831            637 
 Bank loan                  625         773            900 
 Other payables             175         170             91 
                          1,503       1,774          1,628 
                     ----------  ----------  ------------- 
 

12. Called up share capital

 
                                            Unaudited   Unaudited        Audited 
                                              30 June     30 June    31 December 
                                                 2022        2021           2021 
                                              GBP'000     GBP'000        GBP'000 
 Authorised 
 100,000,000 ordinary shares of GBP0.001 
  each                                            100         100            100 
 Called up, issued and fully paid 
 59,408,088 ordinary shares of GBP0.001 
  each                                             59          59             59 
                                           ----------  ----------  ------------- 
 

13. Subsequent events

On 31 August 2022 STM completed the acquisition of the portfolio, net assets, and trustee companies of the SIPP and SSAS businesses, from Mercer Ltd for a total purchase price of GBP3.34m. The acquisition was funded through drawing down the of the unutilised portion of the RBS facility.

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END

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