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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 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 57.50 | 55.00 | 60.00 | 57.50 | 57.50 | 57.50 | 0.00 | 08:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Trust,ex Ed,religious,charty | 24.42M | 844k | 0.0142 | 40.49 | 34.16M |
TIDMSTM
RNS Number : 9094N
STM Group PLC
28 September 2023
28 September 2023
STM Group Plc
("STM", "the Company" or "the Group")
Unaudited Interim Results for the six months ended 30 June 2023
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 2023.
Financial Highlights:
2023 2023 2022 2022 (reported) (underlying)** (reported) (underlying)** Revenue GBP13.2m GBP13.2m GBP11.3m GBP11.3m ------------- ----------------- ------------- ----------------- Profit before GBP1.5m GBP1.8m GBP1.4m GBP1.7m other items* ------------- ----------------- ------------- ----------------- Profit before GBP0.1m GBP0.4m GBP0.5m GBP0.8m taxation ("PBT") ------------- ----------------- ------------- ----------------- Profit before other items margin 11% 14% 12% 15% ------------- ----------------- ------------- ----------------- Earnings per share 0.17p N/A 0.62p N/A ------------- ----------------- ------------- ----------------- Cash at bank GBP13.8m GBP16.9m (net of borrowings) -------------------------------- -------------------------------- Interim dividend - 0.60p -------------------------------- --------------------------------
* defined as revenue from continuing operations less operating expenses i.e. profit from continuing operations before taxation, net finance costs, depreciation, amortization, and non-operating items such as bargain purchase gain and loss on the sale of investments
** Underlying statistics are net of certain transactions which are either non-recurring or exceptional and thus do not form part of the normal course of business.
Operating Highlights:
-- Recurring revenue resilient at 95% of total revenues, similar to prior periods
-- Successful integration of Mercer SIPP and SSAS businesses acquired in the second half of 2022
-- Completion of first part of the strategic review
-- The strategic review led in turn to a Group-wide technology review as part of a drive to improve efficiencies and margins
-- Significant upfront work completed as part of being Consumer Duty ready
-- Appointment of new Head of Business Development, leading to increased volumes of illustrations for our flexible annuity products
-- Successful implementation of new client interest sharing policy
Post-period Highlights:
-- On 11 July 2023, the boards of STM, and PSF Capital GP II Limited as general partner of PSF Capital Reserve LP ("Pension SuperFund Capital"), announced that they had reached agreement in principle on the key terms of a possible cash offer (the "Offer") for the entire issued and to be issued share capital of the Company at a price of 70 pence per share.
-- On 5 September 2023, the Company announced revised terms for a possible cash offer at a price of 67 pence per share that would be conditional upon the completion of a disposal of certain parts of the Group that are non-core to the strategy of Pension SuperFund Capital (the "Revised Possible Offer"). It was also announced that Alan Kentish (a director and shareholder of the Company) had signed heads of terms with STM and Pension SuperFund Capital to acquire certain parts of the Group, comprising the UK SIPP businesses and entities connected with the 'funder' of the Master Trust.
-- On 27 September 2023, the Company announced it had received a revised proposal, being an offer price of up to 67 pence per share, comprising 60 pence per share payable in cash upon completion of the possible offer and a further 7 pence per share by way of an unsecured loan note, repayable 12 months following the date on which a firm intention to make an offer is announced in accordance with Rule 2.7 of the City Code on Takeovers and Mergers (the "Code"), with repayment contingent on certain conditions that are being discussed between Pension SuperFund Capital and the Company. It also announced discussions with Alan Kentish (a director and shareholder of the Company) with respect to the acquisition of certain parts of the Group had been revised such that it is now proposed that Mr Kentish will only acquire the Group's UK SIPP businesses.
-- The Company has also announced in accordance with Rule 2.6(a) of the Code, that a further extension to the date by which Pension SuperFund Capital is required either to announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer for the Company had been granted by the Takeover Panel, in order to allow further time for these discussions to be completed. Consequently, Pension SuperFund Capital is required either to announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer for the Company by not later than 5.00pm on 11 October 2023.
-- There can be no certainty that any offer will ultimately be made for the Company.
For further information, please contact:
STM Group Plc Alan Kentish, Chief Executive Officer Via Walbrook PR Therese Neish, Chief Financial Officer www.stmgroupplc.com Cavendish Capital Markets Ltd (Nominated Tel: +44 (0)20 7600 1658 Adviser and Broker) Matt Goode / Emily Watts / Abigail Kelly- https://www.cavendish.com Corporate Finance Tim Redfern - ECM 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
I am pleased to present the results for the half year ended 30 June 2023. To say it has been a busy period would be an understatement, firstly with the strategic review and more recently in dealing with the possible offer by Pension SuperFund Capital for the entire issued and to be issued share capital of the Company, as first announced on 11 July 2023. During the recent months, the management has been heavily focused on facilitating Pension SuperFund Capital's due diligence workstreams. Despite the exceptional circumstances, all colleagues and teams have worked hard to ensure continued delivery of service to customers and value to shareholders.
In this respect, and as previously announced, certain changes to the policy on interest income were put into effect on 1 July 2023. This allowed for better rate negotiations on client cash balances with banks, and changes were made to how this was shared with customers. Whilst the first half of the year has seen the benefits of increased market interest rates and the income that can be generated from funds held on behalf of clients, the second half of the financial year is particularly expected to see the significant benefits from the change in policy, as well as from the materially rising interest rate environment which the Company has benefited from during 2023. This increased interest income compensated for income from new business generation across the Group being slower than anticipated. With recurring operating revenue continuing to hold up well when compared to the first half of 2022, the overall revenue for the period was 17% higher than the prior period.
Operational expenses for the period were GBP11.7 million (2022: GBP10.0 million), broadly in line with management expectations, with overruns in certain expense categories, mainly legal and professional costs, being compensated for by savings in personnel costs. Non-operational expenses, classified as "other items" on the income statement, increased in comparison with the prior period, particularly in relation to finance costs (GBP302,000, 2022: GBP99,000) and the non-cash item of amortisation of the client portfolios (GBP672,000, 2022: GBP445,000). The increases were expected following the acquisition of the additional SIPP and SSAS portfolios from Mercer Ltd.
Financial review
Financial performance in the period
The Group delivered total revenue in the six months to 30 June 2023 of GBP13.2 million (2022: GBP11.3 million), of which GBP0.9 million was interest income (2022: GBP0.08 million). The current period also saw the benefit of GBP1.4 million of income from the Mercer portfolios which were acquired in September 2022 and which therefore did not contribute to the revenues reported in the prior period.
Recurring revenues at 95% of total revenues for the period remained consistent and in line with the prior period (2022: 94%). Recurring revenues for the current period were GBP12.6 million, as compared to GBP10.6 million in the prior period, with GBP1.4 million being the contribution from the Mercer portfolios.
Profit before other items for the period was GBP1.5 million (2022: GBP1.4 million), with reported profit before tax of GBP0.1 million (2022: GBP0.5 million). A number of one-off and non-recurring costs, including legal and professional costs associated with a strategic review of the business and other contractual matters, were incurred during the period under review. Adjusting for these non-recurring costs results in underlying profit before other items of GBP1.8 million (2022: GBP1.7 million) and underlying profit before tax of GBP0.4 million (2022: GBP0.8 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 PROFIT BEFORE PROFIT BEFORE OTHER ITEMS TAX ------------ ---------------- ---------------- 2023 2022 2023 2022 2023 2022 ----- ----- ------- ------- ------- ------- GBPm GBPm GBPm GBPm GBPm GBPm ----- ----- ------- ------- ------- ------- Reported measure 13.2 11.3 1.5 1.4 0.1 0.5 ----- ----- ------- ------- ------- ------- Add: non-recurring costs - - 0.3 0.3 0.3 0.3 ----- ----- ------- ------- ------- ------- Underlying measure 13.2 11.3 1.8 1.7 0.4 0.8 ----- ----- ------- ------- ------- -------
Cashflows
Cash and cash equivalents as at 30 June 2023 were GBP18.9 million (2022: GBP18.1 million), with cash generated from operating activities being GBP1.6 million (2022: GBP1.2 million), thus exceeding the reported profit before tax.
During the period the Group also repaid GBP0.3 million of the secured bank loan and the outstanding balance as at 30 June 2023 was GBP5.1 million. As a result, net cash and cash equivalents as at 30 June 2023 amounted to GBP13.8 million (2022: GBP16.9 million).
As would be expected for a group which is regulated in several jurisdictions , a significant proportion of the cash balances forms part of the Group's regulatory and solvency requirements. It is not possible to determine the exact amount of cash and cash equivalents required for solvency purposes, as other assets can also be used to support the regulatory solvency requirements. However, the aggregated regulatory capital requirement across the Group as at 30 June 2023 was GBP15.7 million (2022: GBP16.9 million) largely due to the increase in market interest rates resulting in a higher discount rate being applied to the life assurance solvency capital requirement.
Accrued income, in the form of work performed for clients but not billed, as at 30 June 2023 amounted to GBP2.6 million (2022: GBP1.6 million). This increase was largely because of the accrued income on the Mercer portfolios acquired in September 2022, and which would therefore not have been present at the previous period end, and increased interest income accruals because of market rate movements. This gives some visibility of revenue still to be billed and subsequently collected as cash at bank.
Additionally, deferred income relating to annual fees invoiced but not yet earned at 30 June 2023 amounted to GBP4.1 million (2022: GBP3.9 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 2023 were GBP3.5 million (2022: GBP3.4 million).
Prepayments increased by GBP0.6 million to GBP1.3 million (2022: GBP0.7 million) as at the period end as compared to prior year largely as a result of legal fees, claims excesses and Financial Ombudsman Services fees incurred but recoverable from other parties.
Other creditors and accruals increased by GBP2.0 million to GBP6.7 million (2022 (restated): GBP4.7 million) as a result of the Mercer portfolios acquisition and incremental movements in operational accruals across the Group.
As more fully explained in Note 12, the comparative figures in the Statement of Financial Position as at 30 June 2022 have been restated to correct allocations previously made in the prior year's interim financial statements in respect of liabilities for current tax, trade and other receivables, and trade and other payables.
The reallocations had no impact on either the net asset position of the Group as at 30 June 2022 or the income statement of the Group for the six months ended on that date, both as previously reported.
Dividend
Given the ongoing discussions with PSF in respect to a possible offer, the Board has taken the decision not to declare an interim dividend for the current period (2022: interim dividend of 0.6p declared and subsequently paid).
Review of operations
Pensions
The pensions administration businesses continue to be the cornerstone of our operations.
Pensions revenue for the period was GBP11.0 million (2022: GBP9.1 million) representing 83% (2022: 80%) of total Group revenues, with the Mercer portfolios accounting for GBP1.4 million (GBP2022: GBPNil) of the GBP1.9 million of increased revenue. Total pensions revenue arose as follows: GBP4.6 million (2022: GBP4.9 million) from QROPS, GBP3.7 million (2022: GBP1.8 million) from the SIPP and SSAS businesses and a further GBP2.1 million (2022: GBP1.8 million) from the workplace pensions business. In addition, the Group also achieved a revenue contribution of GBP0.6 million (2022: GBP0.6 million) from third party administration and Group Pension Plans.
The recurring revenue percentage for this operating segment increased to 96% of all pensions revenues (2022: 95%), which, when combined with the relatively low attrition rates, remains a solid predictor of future divisional profitability.
With our new Group Head of Business Development having joined earlier in the year and a new business development team now in place, management believes that the pension businesses are now better positioned to drive organic growth. The independent strategic review commissioned in the period also identified areas for focus in technology and processes, which the Group has continued to explore during this period. Subject to the outcome of the possible Offer and related management buy-out, there will be an ongoing focus on these areas to enhance margins. Internationally, the focus is on increasing revenue through our Malta occupational pension schemes for international businesses.
Life Assurance
Revenue for the combined Life Assurance businesses amounted to GBP1.9 million, which was consistent with the revenue generated in the same period in 2022 (GBP1.9 million). In a similar manner to the pensions operating segment, the life assurance businesses also had high levels of recurring fees, which remained stable at 94% of total life assurance revenues (2022: 94%).
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, albeit with our new Business Development team fully embedded the pipeline based on illustrations issued is now considerably higher. The continuing effort to expand our intermediary base is an important part of improving our new business numbers.
Regulatory Developments and Consumer Duty
Consumer Duty, which is a framework set out by the Financial Conduct Authority ("FCA") for providers and adviser firms of all sizes providing financial products or adviser to consumers to measure whether they are delivering good outcomes for UK consumers, came into force on 31 July 2023. This framework puts greater focus on firms to ensure they are actively assessing, improving and evidencing how they are support UK consumers in making good financial decisions about their future. Consumer duty applies to firms operating in the UK, so it applies both to our UK SIPP companies and to our Gibraltar companies that provide products and service to UK residents and financial advisers.
Across the UK and Gibraltar, we implemented a Consumer Duty working party project to oversee the implementation and review our products and service. Various areas of our businesses, products and services were reviewed with changes made to simplify our product range as well as ensuring documentation, processes, procedures and policies were all updated to reflect the regulatory changes. We are pleased with the progress made and, whilst there are areas for improvement, management are of the view that we are meeting our regulatory requirements and our products and services are designed to deliver good customer outcomes.
Outlook
Since 30 June 2023 (being the date to which STM's interim results were drawn up), the Group has continued to demonstrate resilience in its underlying business through the continuing high levels of recurring revenues, supplemented by strengthening interest income from its interest sharing model. As a result, the Group expects to be in line with management's internal expectations for the year ending 31 December 2023.
Possible Offer for the Company
The latest update on the possible offer was announced on 27 September 2023, when the Company updated that it had received a revised proposal, being an offer price of up to 67 pence per share, comprising 60 pence per share payable in cash upon completion of the possible offer and a further 7 pence per share by way of an unsecured loan note, repayable 12 months following the date on which a firm intention to make an offer is announced in accordance with Rule 2.7 of the Code, with repayment contingent on certain conditions that being discussed between Pension SuperFund Capital and the Company. It also announced discussions with Alan Kentish (a director and shareholder of the Company) with respect to the acquisition of certain parts of the Group had been revised such that it is now proposed that Mr Kentish will only acquire the Group's UK SIPP businesses.
The Company has also announced in accordance with Rule 2.6(a) of the Code, that a further extension to the date by which Pension SuperFund Capital is required either to announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer for the Company had been granted by the Takeover Panel, in order to allow further time for these discussions to be completed. Consequently, Pension SuperFund Capital is required either to announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer for the Company by not later than 5.00pm on 11 October 2023. The Board also notes that there can be no certainty that any offer will ultimately be made for the Company.
In the meantime, STM's executive management has continued to focus on developing the underlying businesses of the Group.
Alan Kentish
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period from 1 January 2023 to 30 June 2023
Unaudited Unaudited Audited 6 months 6 months Year to to to 31 December 30 June 30 June 2022 2023 2022 GBP'000 Notes GBP'000 GBP'000 Revenue 5 13,208 11,323 24,094 Administrative expenses (11,729) (9,966) (20,773) ---------------------------------------- ------ ---------- ---------- ------------- Profit before other items 1,479 1,357 3,321 ---------------------------------------- ------ ---------- ---------- ------------- OTHER ITEMS Bargain purchase gain - - 327 (Loss)/gain on revaluation of financial instruments (36) - 11 Loss on disposal of subsidiaries - - (162) Finance costs (302) (99) (322) Depreciation and amortisation (995) (778) (1,597) ---------------------------------------- ------ ---------- ---------- ------------- Profit before taxation 146 480 1,578 ---------------------------------------- ------ ---------- ---------- ------------- Taxation (46) (111) (724) ---------------------------------------- ------ ---------- ---------- ------------- Profit after taxation 100 369 854 OTHER COMPREHENSIVE INCOME Items that are or may be reclassified to profit and loss Foreign currency translation differences for foreign operations (11) 13 12 ---------------------------------------- ------ ---------- ---------- ------------- Total other comprehensive (loss)/income (11) 13 12 Total comprehensive income for the period/year 89 382 866 ---------------------------------------- ------ ---------- ---------- ------------- Profit attributable to: Owners of the Company 100 305 844 Non-controlling interests - 64 10 ---------------------------------------- ------ ---------- ---------- ------------- 100 369 854 ---------------------------------------- ------ ---------- ---------- ------------- Total comprehensive income attributable to: Owners of the Company 89 318 856 Non-controlling interests - 64 10 ---------------------------------------- ------ ---------- ---------- ------------- 89 382 866 ---------------------------------------- ------ ---------- ---------- ------------- Earnings per share basic (pence) 6 0.17 0.62 1.42 Earnings per share diluted (pence) 6 0.17 0.62 1.42
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
Unaudited Unaudited 30 June Audited 30 June 2022 31 December 2023 Restated 2022 (Note 12) Notes GBP'000 GBP'000 GBP'000 ASSETS Non-current assets Property and office equipment 933 1,317 1,161 Intangible assets 21,745 19,437 22,125 Financial assets 1,728 881 1,762 Deferred tax asset 51 76 58 Total non-current assets 24,457 21,711 25,106 ------------------------------- ------ ---------- ----------- ------------- Current assets Accrued income 2,576 1,550 860 Trade and other receivables 9 6,901 6,804 8,461 Receivables due from insurers 488 24,130 488 Cash and cash equivalents 8 18,931 18,118 19,234 ------------------------------- ------ ---------- ----------- ------------- Total current assets 28,896 50,602 29,043 ------------------------------- ------ ---------- ----------- ------------- Total assets 53,353 72,313 54,149 ------------------------------- ------ ---------- ----------- ------------- EQUITY Called up share capital 12 59 59 59 Share premium account 22,372 22,372 22,372 Retained earnings 14,482 14,734 14,382 Other reserves (2,322) (467) (1,843) ------------------------------- ------ ---------- ----------- ------------- Equity attributable to owners of the Company 34,591 36,698 34,970 Non-controlling interests - (388) (68) ------------------------------- ------ ---------- ----------- ------------- Total equity 34,591 36,310 34,902 ------------------------------- ------ ---------- ----------- ------------- LIABILITIES Current liabilities Liabilities for current tax 568 - 788 Trade and other payables 10 12,813 10,366 12,517 Provisions 488 24,130 488 ------------------------------- ------ ---------- ----------- ------------- Total current liabilities 13,869 34,496 13,793 ------------------------------- ------ ---------- ----------- ------------- Non-current liabilities Other payables 11 4,566 1,074 5,050 Deferred tax liabilities 327 433 404 ------------------------------- ------ ---------- ----------- ------------- Total non-current liabilities 4,893 1,507 5,454 ------------------------------- ------ ---------- ----------- ------------- Total liabilities and equity 53,353 72,313 54,149 ------------------------------- ------ ---------- ----------- -------------
STATEMENT OF CONSOLIDATED CASHFLOW
For the period from 1 January 2023 to 30 June 2023
Unaudited Unaudited 30 June Audited 30 June 2022 31 December 2023 Restated 2022 (Note 12) Notes GBP'000 GBP'000 GBP'000 Operating activities Profit for the period/year before tax 146 480 1,578 Adjustments for: Depreciation of property and office equipment 323 333 673 Amortisation of intangible assets 672 445 924 Loss on disposal of property and office equipment 50 - 4 Unrealised loss/(gain) on financial instruments at FVTPL 36 - (11) Bargain purchase gain - - (327) Taxation paid (337) (1,037) (619) Decrease/(increase) in trade and other receivables 1,560 1,150 (1,396) Decrease in receivables due from insurers - - 23,642 (Increase)/decrease in accrued income (1,716) (239) 558 Increase in trade and other payables 857 116 2,428 Decrease in provisions - - (23,642) Net cash generated from operating activities 1,591 1,248 3,812 --------------------------------------- ------ ----------- ----------- ------------- Investing activities Purchase of property and office equipment (143) (13) (165) Increase in intangible assets (292) (527) (937) Disposal of investments - - 1,477 Purchase of financial instrument - - (1,734) Acquisition of non-controlling interests (400) - (120) Consideration paid on acquisition of subsidiaries and portfolio (220) - (3,454) Net cash absorbed by investing activities (1,055) (540) (4,933) Financing activities Proceeds from bank loan - - 4,463 Repayment of bank loan (275) (275) (550) Interest paid on bank loan (190) (62) (162) Lease liabilities paid (363) (473) (724) Dividends paid 7 - - (891) Net cash (absorbed by)/generated from financing activities (828) (810) 2,136 --------------------------------------- ------ ----------- ----------- ------------- (Decrease)/increase in cash and cash equivalents (292) (102) 1,015 --------------------------------------- ------ ----------- ----------- ------------- Reconciliation of net cash flow to movement in net funds Analysis of cash and cash equivalents during the period/year (Decrease)/increase in cash and cash equivalents (292) (102) 1,015 Effect of movements in exchange rates on cash and cash equivalents (11) 13 12 --------------------------------------- ------ ----------- ----------- ------------- Balance at start of period/year 8 19,234 18,207 18,207 Balance at end of period/year 8 18,931 18,118 19,234 --------------------------------------- ------ ----------- ----------- -------------
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
For the period from 1 January 2023 to 30 June 2023
Foreign Share Currency Based Share Share Retained Treasury Translation Payments Other Non-Controlling Total Capital Premium Earnings Shares Reserve Reserve Reserve Total Interests Equity GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ----------------- -------- -------- --------- --------- ------------ --------- --------- -------- ---------------- -------- Balance at 1 January 2022 59 22,372 14,429 (549) (93) 162 - 36,380 (452) 35,928 ----------------- -------- -------- --------- --------- ------------ --------- --------- -------- ---------------- -------- TOTAL COMPREHENSIVE INCOME FOR THE YEAR Profit for the year - - 844 - - - - 844 10 854 Other comprehensive income Foreign currency translation differences - - - - 12 - - 12 - 12 Transactions with owners, recorded directly in equity Acquisition of non-controlling interests - - - - - - (1,375) (1,375) 374 (1,001) Dividend paid - - (891) - - - - (891) - (891) At 31 December 2022 and 1 January 2023 59 22,372 14,382 (549) (81) 162 (1,375) 34,970 (68) 34,902 ----------------- -------- -------- --------- --------- ------------ --------- --------- -------- ---------------- -------- TOTAL COMPREHENSIVE INCOME FOR THE PERIOD Profit for the period - - 100 - - - - 100 - 100 Other comprehensive income Foreign currency translation differences - - - - (11) - - (11) - (11) Transactions with owners, recorded directly in equity Acquisition of non-controlling interests - - - - - - (468) (468) 68 (400) At 30 June 2023 59 22,372 14,482 (549) (92) 162 (1,843) 34,591 - 34,591 ----------------- -------- -------- --------- --------- ------------ --------- --------- -------- ---------------- --------
NOTES TO THE CONSOLIDATED RESULTS
For the period from 1 January 2023 to 30 June 2023
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 AIM, a market operated by London Stock Exchange plc, on 28 March 2007. The address of the Company's registered office is 1(st) Floor, Viking House, St Paul's Square, Ramsey, Isle of Man, IM8 1GB. The Group is primarily involved in financial services.
2. Basis of preparation
Results for the period from 1 January 2023 to 30 June 2023 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 2022. No changes in accounting policies are expected to be reflected in the Group's consolidated financial statements for the year ended 31 December 2023.
4. Segmental information
STM Group has three reportable segments: Pensions, Life Assurance 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 2023 6m 2022 2022 GBP'000 GBP'000 GBP'000 Pensions 10,978 9,072 18,421 Life Assurance 1,937 1,910 5,001 Other Services 293 341 672 ------------------- ---------- ---------- --------- Total 13,208 11,323 24,094 ------------------- ---------- ---------- ---------
Analysis of the Group's turnover information by geographical location is detailed below:
Geographical Segment Unaudited Unaudited Audited 6m 2023 6m 2022 2022 GBP'000 GBP'000 GBP'000 Gibraltar 2,945 2,976 7,324 Malta 3,588 3,755 7,178 United Kingdom 6,425 4,251 9,110 Other 250 341 482 ---------------------- ---------- ---------- --------- Total 13,208 11,323 24,094 ---------------------- ---------- ---------- ---------
5. Revenue
Unaudited Unaudited Audited 6m 2023 6m 2022 2022 GBP'000 GBP'000 GBP'000 Revenue from administration of assets 12,275 11,244 23,563 Interest and investment income 933 79 531 --------------------------------------- ---------- ---------- --------- Total 13,208 11,323 24,094 --------------------------------------- ---------- ---------- ---------
.
6. Earnings per share
Earnings per share for the period from 1 January 2023 to 30 June 2023 is based on the profit after taxation of GBP100,000 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 2023 and 30 June 2022 is as follows:
2023 2022 Weighted average number of shares 59,408,088 59,408,088 Share incentive plan (issued but not fully - - allocated) -------------------------------------------- ----------- ----------- Diluted 59,408,088 59,408,088 -------------------------------------------- ----------- -----------
7. Dividends
The following dividends were declared and paid by the Group during the period:
Unaudited Unaudited Audited 30 June 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'000 0.0 pence (2022: 1.5 pence) per qualifying ordinary share - - 891 ----------- ----------- -------------
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 GBP18,931,000 (2022: GBP18,118,000).
9. Trade and other receivables
Unaudited Unaudited Audited 30 June 30 June 31 December 2023 2022 2022 GBP'000 Restated GBP'000 GBP'000 Trade receivables 3,543 3,421 4,266 Prepayments 1,296 723 999 Other receivables 2,062 2,660 3,196 ------------------- ---------- ---------- ------------- Total 6,901 6,804 8,461 ------------------- ---------- ---------- ------------- 10. Trade and other payables Unaudited Unaudited Audited 30 June 30 June 31 December 2023 2022 2022 GBP'000 Restated GBP'000 GBP'000 Deferred income 4,139 3,869 3,842 Trade payables 1,069 547 882 Bank loan (secured) 550 550 552 Lease liabilities 335 638 570 Contingent consideration - 56 56 Other creditors and accruals 6,720 4,706 6,615 ------------------------------ ---------- ---------- ------------- Total 12,813 10,366 12,517 ------------------------------ ---------- ---------- -------------
The Company signed a credit facility with Royal Bank of Scotland (International) Ltd for GBP5.50 million in 2020, with drawn down being completed in September 2022 to fund the acquisition of the Mercer portfolios. The facility has a 5-year term from November 2020, with capital repayments structured 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, the balance outstanding on this facility was GBP5.1 million. Interest on the loan is charged at 3.5% per annum over the Sterling Relevant Reference Rate on the outstanding balance. Prior to fully drawing down the loan, interest was paid on the undrawn balance at a 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 (profit before other items) to debt service liability ratio covenants tested quarterly and is secured by a capital guarantee provided by a number of non-regulated holding subsidiary companies within the Group and debenture over these companies.
11. Other payables - amounts falling due in more than a year Unaudited Unaudited Audited 30 June 30 June 31 December 2023 2022 2022 GBP'000 GBP'000 GBP'000 Lease liabilities 28 273 143 Bank loan (secured) (Note 10) 4,538 625 4,811 Other payables - 176 96 ------------------------------- Total 4,566 1,074 5,050 ------------------------------- ---------- ---------- -------------
12. Reclassification - reallocation of prior year corporate tax and payroll tax obligations
The comparative figures in the Statement of Financial Position as at 30 June 2022 have been restated to correct allocations previously made in the prior year's interim financial statements.
The Statement of Financial Position as at 30 June 2022 disclosed GBP786,000 as a corporate tax liability whereas this liability was in relation to payroll obligations due but not paid. Similarly, other creditors and accruals previously reported as at 30 June 2022 included a recoverable of GBP255,000 in relation to a refund of corporation tax due from the Malta authorities.
The above reallocations had no impact on either the net asset position of the Group as at 30 June 2022 or the income statement of the Group for the six months ended on that date, both as previously reported. The tables below reflect the impact of this change in presentation.
Unaudited as at 30 June 2022 As previously As reported Reallocation restated GBP'000 GBP'000 GBP'000 ADJUSTMENTS IN RELATION TO CURRENT ASSETS Trade and other receivables Other receivables 2,405 255 2,660 Trade and other receivables 6,549 255 6,804 ------------------------------------------- --------------- --------------- ---------- CURRENT ASSETS 50,347 255 50,602 ------------------------------------------- --------------- --------------- ---------- Unaudited as at 30 June 2022 As previously As reported Reallocation restated GBP'000 GBP'000 GBP'000 ADJUSTMENTS IN RELATION TO CURRENT LIABILITIES Liabilities for current tax 786 (786) - Trade and other payables Other creditors and accruals 3,665 1,041 4,706 Trade and other payables 9,325 255 10,366 ------------------------------------------------ -------------- --------------- ---------- TOTAL CURRENT LIABILITIES 34,241 255 34,496 ------------------------------------------------ -------------- --------------- ---------- TOTAL LIABILITIES AND EQUITY 72,058 255 72,313
------------------------------------------------ -------------- --------------- ----------
13. Called up share capital
Unaudited Unaudited Audited 30 June 30 June 31 December 2023 2022 2022 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 ---------- ---------- -------------
14. Subsequent events
On 11 July 2023, the boards of STM, and Pension SuperFund Capital", announced that they had reached agreement in principle on the key terms of a possible cash offer (the "Offer") for the entire issued and to be issued share capital of the Company at a price of 70 pence per share.
On 5 September 2023, the Company announced revised terms for a possible cash offer at a price of 67 pence per share that would be conditional upon the completion of a disposal of certain parts of the Group that are non-core to the strategy of Pension SuperFund Capital (the "Revised Possible Offer"). It was also announced that Alan Kentish (a director and shareholder of the Company) had signed heads of terms with STM and Pension SuperFund Capital to acquire certain parts of the Group, comprising the UK SIPP businesses and the businesses connected with and including the Master Trust.
On 27 September 2023, the Company announced it had received a revised proposal, being an offer price of up to 67 pence per share, comprising 60 pence per share payable in cash upon completion of the possible offer and a further 7 pence per share by way of an unsecured loan note, repayable 12 months following the date on which a firm intention to make an offer is announced in accordance with Rule 2.7 of the Code, with repayment contingent on certain conditions that are under negotiation between Pension SuperFund Capital and the Company. It also announced discussions with Alan Kentish (a director and shareholder of the Company) with respect to the acquisition of certain parts of the Group had been revised such that it is now proposed that Mr Kentish will only acquire the Group's UK SIPP businesses.
The Company has also announced in accordance with Rule 2.6(a) of the Code, that a further extension to the date by which Pension SuperFund Capital is required either to announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer for the Company had been granted by the Takeover Panel, in order to allow further time for these discussions to be completed. Consequently, Pension SuperFund Capital is required either to announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer for the Company by not later than 5.00pm on 11 October 2023. The Board also notes that there can be no certainty that any offer will ultimately be made for the Company.
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