TIDMSTM
RNS Number : 3336Z
STM Group PLC
14 March 2017
STM Group Plc
("STM", "the Company" or "the Group")
Final Results for the
12 months ended 31 December 2016
STM Group Plc (AIM: STM), the multi-jurisdictional financial
services group, is pleased to announce its audited final results
for the 12 months ended 31 December 2016.
Financial Highlights:
-- Revenue for the period up 8% at GBP17.4 million (2015: GBP16.2 million)
-- EBITDA for the period of GBP3.1 million (2015: GBP3.1 million)
-- Profit before tax for the period of GBP2.8m million (2015: GBP2.7 million).
-- Earnings per share of 3.99 pence (2015: 3.99p pence)
-- Strong balance sheet with cash and cash equivalents balance
up 49% at GBP11.9 million (31 December 2015: GBP8.0 million)
-- Final dividend of 1.0 pence per ordinary share recommended
giving a total dividend for the year of 1.5p
Operational Highlights:
-- Acquisition of UK SIPP business and a life assurance company,
London & Colonial Holdings Ltd (LCH), for up to GBP5.385m,
which completed on 21 October 2016
-- Smooth integration of LCH businesses generating cost savings - on track to save GBP500,000
-- Significant organic growth rate in STM Life of 32% compared to 2015
-- Review of QROPS pricing structure resulting in enlarged long
term client base and almost 11,000 QROPS pension members as at 31
December 2016 (2015: 9,688)
-- Strengthening of main Board and senior management to support
future growth - two new non-executives and new Head of Enterprise
Risk Management
Outlook After Spring Budget Announcement
-- New QROPS business impaired by budget announcement for non-European clients
-- STM's existing 11,000 QROPS members unaffected and this
recurring revenue generates over 90% of pensions total revenue
-- UK SIPP offering expected to be used by intermediary network as an alternative to QROPS
-- STM's other business units which generate 50% of Group
revenue are not affected by the budget changes
Commenting on the results and prospects for STM, Alan Kentish,
Chief Executive Officer, said:
"2016 has been a significant year for the STM Group, delivering
solid results and two strategically important developments.
"The 2017 spring budget certainly has thrown a curve ball into
our expectations for new QROPS business. However, our business
model is based on a robust recurring revenue stream and thus,
whilst profits for 2017 will have been impacted, we still expect a
growth in profit compared to 2016."
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
For further information, please contact:
STM Group Plc
Alan Kentish, Chief Executive Tel: 00 350 200
Officer 42686
alan.kentish@stmgroupplc.com www.stmgroupplc.com
Therese Neish, Chief Financial Tel: 00 350 200
Officer 42686
therese.neish@stmgroupplc.com
finnCap www.finncap.com
Matt Goode / Emily Watts - Corporate Tel: +44 (0) 20
Finance 7220 0500
Mia Gardner - Corporate Broking
Walbrook www.walbrookpr.com
Tom Cooper / Paul Vann Tel: +44 (0) 20
7933 8780
Mob: +44 (0) 797
122 1972
tom.cooper@walbrookpr.com
Notes to editors:
STM is a multi jurisdictional financial services group which is
listed on the AIM Market of the London Stock Exchange. The Group
specialises in the delivery of a wide range of financial service
products to professional intermediaries and the administration of
assets for international clients in relation to retirement, estate
and succession planning and wealth structuring.
Today, STM has operations in Gibraltar, Malta, Jersey, Spain and
UK, through its acquisition of London & Colonial Holdings Ltd
in September 2016. The Group is looking to expand through the
development of additional products and services that its ever more
sophisticated clients demand. STM has developed a specialist
international pensions division which specialises in Qualifying
Recognised Overseas Pension Schemes (QROPS), Qualifying Non UK
Pension Schemes (QNUPS) and UK SIPPs. STM has a Gibraltar Life
Insurance Company, STM Life plc, which provides life insurance
bonds - wrappers in which a variety of investments, including
investment funds, can be held.
Further information on STM Group can be found at
www.stmgroupplc.com
Chairman's statement
I am pleased to present the Group's financial results for the
year ended 31 December 2016 which continue to show a solid
performance and which provide the foundation to underpin the
Board's confidence in the future.
in 2016, the positive effect of the Board's decision to change
our QROPS pricing structure, with the temporary suspension of the
establishment fees on new business, increased our recurring revenue
streams, thus delivering a stronger cash generation. This allows
the business to continue its dividend policy, meet the repayment
terms of the London & Colonial Holdings Ltd ("LCH")
acquisition, and still leave strong cash balances.
This year has seen a number of changes to the composition of the
Board and the further strengthening of the Group's senior
management structure through the creation of the Head of
Distribution, Head of Pensions and Head of Enterprise Risk
Management roles which will support future growth and stability.
Through this strengthening of the Board and management, the
acquisition of LCH and the pursuit of our business development
plans, we are confident that STM will continue to improve its
product offering and broaden its revenue streams.
I would like to take this opportunity to personally thank all of
the Group's directors, executive and staff for their efforts in
delivering the growth in our business while expanding our product
offerings.
The Board believes that the Group has taken significant steps in
2016 to advance its growth and profitability strategy.
Notwithstanding the impact of the UK's Spring Budget we look
forward with optimism to further delivering on STM's potential in
the forthcoming years.
Michael Riddell
Chairman
Chief Executive's statement
Introduction
It gives me great pleasure to present the annual results for STM
Group Plc for the year ended 31 December 2016. There is no doubt
that my first year as CEO has been an exciting and a busy one,
albeit with some challenges, which pleasingly were overcome to
bring financial performance back in line with management's revised
expectation.
One of these challenges was the effect of external influences
producing lower than expected numbers of new QROPS applications
during the first four months of the year, Whilst this was not
envisaged or expected by the business at the start of the year,
management was able to swiftly address this by significantly
changing the pricing structure for new QROPS business by
temporarily waiving the establishment fee for new policies. Whilst
this resulted in forgoing some revenue for this year, the vision
was to generate increased long-term recurring revenue, thus a short
term pain for the sake of longer-term benefits.
I am pleased to say this initiative paid off and has resulted in
1,500 new pension clients in the year, thus bringing the annual run
rate for new business back in line with the second half of the
previous year and bringing the total number of QROPS policies under
management to almost 11,000 as at 31 December 2016.
In October 2016, STM saw the realisation of an important
strategic objective by way of the acquisition of London &
Colonial Holdings Limited ("LCH"). The Board viewed the acquisition
of a small UK SIPP business as very complementary to our existing
pensions operations.
The new pensions administration office in the United Kingdom
continues to help STM position itself as a truly international
pensions administrator, and builds on our administrative offices in
Malta and Gibraltar. In addition, the Group has also expanded its
worldwide presence by opening a further sales office in Australia
to access a significant UK expatriate community for its Australian
tax office approved Gibraltar based QROPS. This sales office
follows the same concept as STM's business development offices in
Dubai, Hong Kong, South Africa and Europe.
STM continues to invest both human and financial resources in
its product development team for both enhancing existing product
offerings for short term profitability as well as in new pension
and life assurance products for the medium term.
Acquisition of London & Colonial Holdings Limited (LCH)
during the year
STM Group had been reviewing ways to enter the UK SIPP market
for some time as we believed this to be a highly complementary
addition to our existing international pensions business, in that
it would allow us to offer a solution for those expatriates
returning to the UK.
The acquisition of LCH in late 2016, which included a SIPP
operation, ticked this box; but in reality brought much more to the
Group than a SIPP business alone. Aside from the UK SIPP business,
LCH has two further companies in Gibraltar, between them offering
QROPS and life assurance products. This acquisition has therefore
contributed towards the increased revenues in the year both in the
pensions and life assurance segments.
Since its acquisition the integration has proceeded smoothly
with the Gibraltar businesses having relocated to STM's existing
offices, thus realising cost savings, as expected, with effect from
1 January 2017.
In addition to the cost savings, which are expected to be in the
region of GBP0.5 million for 2017, I am pleased to note that the
management team has been retained by STM, thus providing continuity
to our clients and staff. Furthermore, whilst it is still early
days, management of both STM and LCH are working on various
initiatives which could result in a redeployment of regulated
capital.
Operational Overview
Pensions
Our pensions business continued to show solid growth from new
business, with turnover in the year amounting to GBP9.2 million
(2015: GBP8.6 million). This 7.5% increase in revenues is as a
result, in equal measure, of both organic growth and the
acquisition of the SIPP and QROPS businesses which form part of the
LCH acquisition. Our pensions business this year accounted for 52%
of the Group's turnover (2015: 53%), with this slight decrease
being as a result of the significant growth seen in the life
assurance segment.
As a result of the pricing initiative taken in April 2016,
whereby we waived our establishment fees on new QROPS business, we
saw this one off fee revenue fall from GBP1.4 million in 2015 to
GBP0.3 million in 2016. However, as anticipated, this saw an
acceleration in new business introductions that will have a longer
term contribution to profitability through increased annual
recurring fees from an enlarged client base.
As a percentage, the organic growth in the pensions business for
2016 has been noted equally in Gibraltar and Malta. However, in
terms of client numbers and revenues generated, the increase is
considerably higher in Malta. As noted in prior years, this was
primarily due to our Malta based US Plan continuing to gain
traction.
Consequently, Malta remains the larger of our two jurisdictions
with pension turnover of GBP6.5 million (2015: GBP6.3 million),
with Gibraltar having generated GBP2.4 million (2015: GBP2.3
million) of turnover in the year. Annual recurring revenue for 2016
amounted to GBP8.5 million (2015: GBP7.1 million) which represents
93% (2015: 82%), giving a highly visible and predictable future
revenue stream.
The pensions business acquired as part of the LCH Group has
generated circa GBP0.3 million of revenues during the 3 months that
LCH was successfully integrated into the Group.
Life assurance
The acquisition of LCH and with it the Gibraltar based life
assurance company (LCA) will give STM Life critical mass and result
in considerable cost savings. That said, I am pleased to note that
the organic growth for STM Life during the year has delivered a
significant 32% uplift, to generate turnover for 2016 of GBP1.9
million (2015: GBP1.4 million). Furthermore, within the revenue
figure reported, annual fees and investment income amounted to
GBP1.4 million compared to GBP0.8 million in 2015. This provides a
steady and highly visible annuity income stream going forward.
Since the acquisition, LCA has generated regular revenues of
GBP0.5 million as per management's expectations. However, in
addition, as a result of the cost saving initiatives put in place
for 2017, the cost per policy of running this business has
decreased. As such we have been able to release part of the
insurance technical expense reserve. This release of GBP0.5 million
has resulted in increased surplus on the long term business fund
and thus increased revenues for the Group.
Corporate and Trustee Services
Turnover from the Corporate and Trustee Services (CTS) division
for the year was GBP4.4 million (2015: GBP5.1 million) thus
accounting for 25% of the Group's total turnover (2015: 31%). This
business is generated in Jersey and Gibraltar, with Jersey revenue
accounting for circa 56% (2015: 54%) of the CTS business at GBP2.5
million (2015: GBP2.7 million) and Gibraltar generating turnover of
GBP1.9 million (2015: GBP2.3 million).
As noted in last year's report, the decrease in Gibraltar based
revenues was expected as this was driven by a loss of client
structures having closed down during 2015. As such, management
reacted accordingly and adjusted its cost base to ensure
profitability going forward was maintained. Similarly, initiatives
have taken place in Jersey to maintain profitability levels.
Other trading divisions and new initiatives
Trading in other divisions, which are mainly insurance
management and the Spanish office, was broadly in line with
management expectations. These are expected to continue at similar
levels going forward having generated revenue of GBP1.1 million in
the year (2015: GBP1.1 million).
Financial Review
Performance in the year
Whilst profitability remained fairly consistent with 2015,
revenues for the Group increased in the year by over 8% to GBP17.4
million (2015: GBP16.2 million). This is predominantly as a result
of the LCH acquisition which was acquired for the prospect of the
synergies but which at the time of acquisition was very much a
break-even business. Thus, whilst this has resulted in increased
revenues, it will be 2017 before we see steady contributions to
monthly profit.
As expected, given the nature of the pension business, the
amount of recurring annuity revenue business continues to increase
and now accounts for 75% of 2016 total revenues (2015: 66%).
EBITDA has remained consistent with 2015 at GBP3.1 million
(2015: GBP3.1 million).
Finance costs for the year were slightly lower at GBP0.1 million
which was to be expected given the only borrowing in place for the
Group was taken out towards the end of the year for the purposes of
the acquisition of LCH. The depreciation and amortisation charge
has in turn increased as a result of amortising the client
portfolio acquired with LCH. This is GBP0.3 million in 2016 (2015:
GBP0.2 million).
Profit before tax was GBP2.8 million for the year (2015: GBP2.7
million) with earnings per share remaining consistent at 3.99p.
Diluted earnings per share takes into consideration the long-term
incentive plan approved by the Company as approved by the
shareholders at the Annual General Meeting on 18 May 2016 which
stipulates a maximum dilution factor of 5%.
The effective tax rate in the year remained fairly consistent at
14% with the prior year (2015: 15%). The charge for the year was
GBP0.4 million (2015: GBP0.4 million).
Cashflows
Overall cash balances at the year end have increased by GBP3.7
million (2015: GBP2.4 million) resulting in cash and cash
equivalents balance of GBP11.9 million at 31 December 2016 (2015:
GBP8.0 million). Cash generated from operating activities during
the year after the LCH acquisition amounted to GBP1.4 million
(2015: GBP3.2 million). Whilst the Company has made two cash
payments for the acquisition during the year totalling GBP4.2
million it sought bank borrowings of GBP3.3 million and acquired
GBP5.0 million of cash and cash equivalents.
The bank borrowings of GBP3.3 million taken out in October 2016
for the purposes of the acquisition is capital repayment free for
the first year, at a rate of 4% above LIBOR. Repayments are then
quarterly over years 2 and 3.
In line with most services businesses, the Group had accrued
income in the form of work performed for clients but not yet billed
at the year end of GBP1.2 million (2015: GBP1.8 million). The
Group's accounting policy for accrued income in relation to its
pensions business is based on the number of applications received
but for which an invoice has not yet been raised. Invoices are
raised once the pension funds are received and the fees can be
taken. The decrease in accrued income primarily relates to the
abolishment of the establishment fees on new business and the
reduced CTS client portfolios.
Deferred income (a liability in the statement of financial
position), representing fees billed in advance yet to be credited
to the statement of total comprehensive income, has increased to
GBP3.8 million, as compared to the balance as at 31 December 2015
of GBP2.6 million. The main reason for this increase of GBP1.2
million is the acquisition of LCH which has deferred income at the
year end of GBP1.1 million.
Both the accrued and deferred income will be invoiced and earned
in 2017 thus providing visibility on fees for the forthcoming
year.
Trade and other receivables as at 31 December 2016 has increased
to GBP5.2 million (2015: GBP4.2 million). Trade receivables at the
year end stood at GBP3.4 million (2015: GBP3.1 million) and the
increase in this is in part due to the acquisition (GBP0.1 million)
with the balance being as a result of increased pensions business.
Other receivables amount to GBP1.8 million (2015: GBP1.1 million).
This increase of GBP0.7 million in other receivables is due to the
acquisition (GBP0.3 million) and increased prepayments.
Dividend Policy
Following the reinstatement of the Group's dividend policy in
March 2016 I am pleased to advise that the Board is recommending
the payment of a final dividend of 1.0p per share (2015: 0.9p per
share). This together with the interim dividend paid of 0.5p in
November 2016 (2015: nil) makes a proposed total dividend for the
year of 1.5p per share (2015: 0.9p).
The Board remains committed to enhancing shareholder value by
growing the dividend subject to the working capital requirements
and planned investment in the business. If approved, the final
dividend will be paid on 28 June 2017 to shareholders on the
register at the close of business on 2 June 2017. The ordinary
shares will become ex-dividend on 1 June 2017.
Outlook
2016 was a year that presented some early challenges however
which ended strongly and met revised expectations. The pricing
policy decision and the acquisition of London & Colonial
Holdings Ltd resulted in a solid and steady increase in new
pensions applications for the latter half of 2016, and this was
expected to continue into 2017.
However, in the UK Government's Spring budget speech on the 8
March 2017, the Chancellor indicated that there will be significant
charges and tax implications for some individuals considering
taking out a QROPS transfer from a UK pension scheme.
This change is likely to have an impact on STM's ability to
significantly grow the number of QROPS policies it administers;
however it is not anticipated that this tax change will impact the
Group's existing QROPS business, which generated recurring revenue
from annual management charges of approximately GBP8.5 million in
2016.
Whilst it is very early days to fully understand the exact
impact, it would appear that some 20% of anticipated new QROPS
business will be unaffected. The other 80% of anticipated new
business, which is generated outside of the EEA, may be at risk.
However, we believe that some of this potential loss of QROPS
business will manifest itself into new UK SIPP applications, as a
result of the proposed legislation.
It is still too early to quantify the exact potential impact on
our new QROPS business, which the Directors anticipate will be
somewhat mitigated by an increase in UK SIPP applications. We have
however taken a prudent approach to revising our expectations for
the growth in Group revenue from 2016 to 2017 and assumed that on a
worst case scenario the potential reduction in new QROPS
applications will result in our Group revenue expectation for 2017
being reduced by some GBP1.1 million compared to our previous
expectations. This worst case scenario still represents double
digit revenue growth from 2016 to 2017 and does not yet reflect
changes in the Group's cost base which management will focus on,
where appropriate, to ensure that margins can be maintained.
In turn, it is anticipated that this proposed legislation will
stagnate some of the QROPS market in Gibraltar and Malta, and that
this will lead to some consolidation in the marketplace. STM, with
strong cash balances, would be well placed to capitalise on this
opportunity.
In relation to the LCH acquisition, management expectations are
that the full integration will be achieved during the course of
2017, achieving the synergy benefits and, in turn, resulting in a
solid and steady profit contributor to the Group.
The Board remains focussed on bringing new products to market,
and the shortly-to-be launched Australian product will bring about
a further revenue stream, unaffected by the UK Spring Budget
proposals..
The main Board and senior management appointments made in 2016
strengthen the Group's focus on risk management and service level
functionality. As the business continues to grow, the Board is
conscious of the necessity to ensure sufficient management
bandwidth to maintain corporate governance standards, as well as
striving for excellence in our service levels for all
stakeholders.
STM is an ambitious business with a growth strategy and first
mover advantage in some relatively untapped markets. The STM
management team is conscious that the market expectations for 2017
will come down from the previous significant uplift in
profitability anticipated, but management are confident that there
will continue to be growth in profitability in 2017.
I look forward to updating the market on our achievements during
the course of the year.
Alan Kentish
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR FROM 1 JANUARY 2016 TO 31 DECEMBER 2016
Year ended Year ended
31 December 31 December
2016 2015
Notes GBP000 GBP000
----------------------- ---------------------
Revenue 4 17,433 16,179
Administrative expenses 5 (14,318) (13,078)
-------------------------------- ----------------------- ---------------------
Profit before other items 3,115 3,101
-------------------------------- ----------------------- ---------------------
OTHER ITEMS
Finance costs (87) (147)
Depreciation and amortisation (273) (249)
-------------------------------- ----------------------- ---------------------
Profit before taxation 2,755 2,705
-------------------------------- ----------------------- ---------------------
Taxation (382) (409)
-------------------------------- ----------------------- ---------------------
Profit after taxation 2,373 2,296
-------------------------------- ----------------------- ---------------------
OTHER COMPREHENSIVE INCOME
Foreign currency translation
differences for foreign
operations 282 (41)
Total other comprehensive
income 282 (41)
-------------------------------- ----------------------- ---------------------
Total comprehensive income
for the year 2,655 2,255
-------------------------------- ----------------------- ---------------------
Earnings per share basic
(pence) 9 3.99 3.99
Earnings per share diluted
(pence) 9 3.87 3.79
There have been no discontinued activities in the year.
Accordingly, the above results relate solely to continuing
activities.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
31 December 31 December
2016 2015
Notes GBP000 GBP000
------------------------------- ------ ------------ ------------
ASSETS
Non-current assets
Property, plant and equipment 7 889 837
Intangible assets 18,544 16,832
Investments 792 708
------------------------------- ------ ------------ ------------
Total non-current assets 20,225 18,377
------------------------------- ------ ------------ ------------
Current assets
Investments 4,239 --
Accrued income 1,214 1,809
Trade and other receivables 5,193 4,193
Cash and cash equivalents 7 11,869 8,036
------------------------------- ------ ------------ ------------
Total current assets 22,515 14,038
------------------------------- ------ ------------ ------------
Total assets 42,740 32,415
------------------------------- ------ ------------ ------------
EQUITY
Called up share capital 8 59 59
Share premium account 8 22,372 22,372
Reserves 5,231 3,614
------------------------------- ------ ------------ ------------
Total equity attributable
to equity shareholders 27,662 26,045
------------------------------- ------ ------------ ------------
LIABILITIES
Current liabilities
Liabilities for current
tax 1,070 1,271
Trade and other payables 10,708 5,099
------------------------------- ------ ------------ ------------
Total current liabilities 11,778 6,370
------------------------------- ------ ------------ ------------
Non current liabilities
Other payables 3,300 --
------------------------------- ------ ------------ ------------
Total non-current liabilities 3,300 --
------------------------------- ------ ------------ ------------
Total liabilities and equity 42,740 32,415
------------------------------- ------ ------------ ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR FROM 1 JANUARY 2016 TO 31 DECEMBER 2016
Year ended Year ended
31 December 31 December
2016 2015
Notes GBP000 GBP000
--------------------------------------- ------------------- --------------------
Reconciliation of operating profit
to net cash flow from
operating activities
Profit for the year before
tax 2,755 2,705
----------------------------------- ------------------- --------------------
ADJUSTMENTS FOR:
Depreciation and amortisation 262 246
Loss on sale of fixed asset 6 11 3
Taxation paid (583) (199)
Unrealised loss in investments (291) 29
Share based payments 34 --
(Increase)/decrease in trade
and other receivables (472) 582
Decrease in accrued income 595 349
Decrease in trade and other
payables (1,154) (506)
----------------------------------- ------------------- --------------------
Net cash from operating
activities 1,157 3,209
----------------------------------- ------------------- --------------------
INVESTING ACTIVITIES
Acquisition of property,
plant and equipment 6 (204) (66)
Consideration paid on acquisition 3 (4,235) --
Cash acquired on acquisition 3 5,018 --
Acquisition of treasury
shares (45) --
Increase in intangibles (113) (68)
Net cash used in investing
activities 421 (134)
----------------------------------- ------------------- --------------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Bank loan 3,300 --
Loan note repayments (300) (700)
Dividends paid 8 (832) --
----------------------------------- ------------------- --------------------
Net cash from financing
activities 2,168 (700)
----------------------------------- ------------------- --------------------
Increase in cash and cash
equivalents 3,746 2,375
----------------------------------- ------------------- --------------------
RECONCILIATION OF NET CASH
FLOW TO MOVEMENT IN NET
FUNDS
Analysis of cash and cash
equivalents during the year
Increase in cash and cash
equivalents 3,746 2,375
Translation of foreign operations 87 (50)
Balance at start of year 8,036 5,711
Balance at end of year 7 11,869 8,036
----------------------------------- ------------------- --------------------
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
FOR THE YEAR FROM 1 JANUARY 2016 TO 31 DECEMBER 2016
Share
based
Share Share Retained Treasury Translation payments
Capital premium earnings Shares reserve reserve Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ----------- ------------- ------------- ------------- ---------------- ------------- ---------
Balance at 1
January 2015 53 20,828 1,583 (206) (9) -- 22,249
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Profit for the
year -- -- 2,296 -- -- -- 2,296
Other comprehensive income
Foreign
currency
translation
differences -- -- -- -- (41) -- (41)
Transactions with owners, recorded directly in equity
Shares issued
in the year 6 1,544 -- -- -- -- 1,550
Dividend paid -- -- -- -- -- -- --
Exchange gain
on equity -- -- -- -- (9) -- (9)
Treasury
shares
purchased -- -- -- -- -- -- --
---------------- ----------- ------------- ------------- ------------- ---------------- ------------- ---------
At 31
December
2015 59 22,372 3,879 (206) (59) -- 26,045
Balance at 1
January 2016 59 22,372 3,879 (206) (59) -- 26,045
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Profit for the
year -- -- 2,373 -- -- -- 2,373
Other comprehensive income
Foreign
currency
translation
differences -- -- -- -- 282 -- 282
Transactions with owners, recorded directly in equity
Shares issued
in the year -- -- -- -- -- -- --
Dividend paid -- -- (832) -- -- -- (832)
Exchange gain
on equity -- -- -- -- (195) -- (195)
Share based
payments -- -- -- -- -- 34 34
Treasury shares
purchased -- -- -- (45) -- -- (45)
---------------- ----------- ------------- ------------- ------------- ---------------- ------------- ---------
At 31
December
2016 59 22,372 5,420 (251) 28 34 27,662
---------------- ----------- ------------- ------------- ------------- ---------------- ------------- ---------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR FROM 1 JANUARY 2015 TO 31 DECEMBER 2015
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 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
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") and interpretations adopted by the International
Accounting Standards Board ("IASB") and in accordance with Isle of
Man company law.
3. Acquisition of subsidiary
On 21 October 2016, the Company acquired 100% of the ordinary
shares and voting interest in London & Colonial Holdings
Limited (LCH).
LCH is a service led independent financial services group with
its head office in Haywards Heath, UK, offering SIPP products in
the United Kingdom; Qualifying Recognised Overseas Pension Schemes
("QROPs") in Gibraltar and a life assurance business in Gibraltar.
The acquisition is highly complementary to STM's existing business
and strategy and will contribute to the growth of STM. It provides
critical mass for STM's life assurance business as well as
establishing STM in the UK SIPP market, the successful realisation
of an important strategic objective of the Company. It will also
benefit from cost synergies, economies of scale and a good quality
management team that has been retained by the Company. All of these
factors contribute to the goodwill recognised.
The acquisition has been accounted for using the acquisition
method. Transaction costs incurred on the acquisition total
GBP88,549 and have been expensed within administrative expenses in
the consolidated statement of comprehensive income.
Consideration for the acquisition is broken down as follows:
GBP'000s
-------------------------- ---------
Initial cash payment 4,135
Second cash payment 100
Contingent consideration 1,150
-------------------------- ---------
Total 5,385
-------------------------- ---------
The contingent consideration is payable within the first year
following acquisition and is dependent on certain regulatory
capital requirements being met and standard indemnities provided by
the Sellers. Whilst it is not possible to determine the exact
amount of the contingent consideration, the Group estimates the
fair value of this to be the maximum amount payable, being
GBP1,150,000.
The fair value of the identifiable assets and liabilities of LCH
as at the date of the acquisition was:
Fair value
recognised Fair value Previous
on acquisition adjustments carrying
GBP'000s GBP'000s value
GBP'000s
------------------------------- ---------------------- ------------------------- -------------------------
Investments 4,032 -- 4,032
Property, plant and equipment 79 -- 79
Client portfolio 1,000 1,000 --
Product development 106 -- 106
Cash at bank 5,018 -- 5,018
Trade and other receivables 528 -- 528
Insurance technical reserves (3,305) -- (3,305)
Accruals and deferred
income (1,907) -- (1,907)
Trade and other payables (701) -- (701)
------------------------------- ---------------------- ------------------------- -------------------------
Total identifiable net
assets at fair value 4,850 1,000 3,850
------------------------------- ---------------------- ------------------------- -------------------------
As at the reporting date the actuarially calculated insurance
technical reserve was GBP2,805,000.
From the date of acquisition LCH has contributed GBP1,258,000 to
revenue and GBP670,000 to the Group profit. If the acquisition had
occurred on 1 January 2016, management estimates that consolidated
revenue would have been GBP4,118,000 and consolidated profit would
have been GBP393,000.
Goodwill arising from the acquisition has been recognised as
follows:
GBP'000s
Total acquisition cost 5,385
Fair value of identifiable net
assets (4,850)
-------------------------------- ---------
Goodwill 535
-------------------------------- ---------
4. Revenue
31 December 31 December
2016 2015
GBP000 GBP000
---------------------------------- ------------ ------------
Revenue from administration of
assets 17,433 16,179
---------------------------------- ------------ ------------
Total revenues 17,433 16,179
---------------------------------- ------------ ------------
5. Administrative expenses
31 December 31 December
2016 2015
GBP000 GBP000
Wages and salaries 7,078 6,353
Social insurance costs 396 330
Pension contributions 110 61
Share based payments 34 --
Total personnel expenses 7,618 6,744
-------------------------- ------------ ------------
Average number of employees
31 December 31 December
2016 2015
Group Number Number
----------------------------------- ------------ ------------
Average number of people employed
(including executive directors) 173 163
----------------------------------- ------------ ------------
6. Property, plant and equipment
Motor Office Leasehold
Vehicles Equipment Improvements Total
Group GBP000 GBP000 GBP000 GBP000
--------------------------- ---------------- ------------------- ---------------- -------------
Costs
As at 1 January 2015 12 1,543 876 2,431
Additions at cost -- 66 -- 66
Disposals -- (10) -- (10)
As at 31 December 2015 12 1,599 876 2,487
--------------------------- ---------------- ------------------- ---------------- -------------
As at 1 January 2016 12 1,599 876 2,487
Acquired through business
combination 3 58 18 79
Additions at cost 15 189 -- 204
Disposals (15) (32) -- (47)
As at 31 December 2016 15 1,814 894 2,723
--------------------------- ---------------- ------------------- ---------------- -------------
Depreciation
As at 1 January 2015 10 814 633 1,457
Charge for the year 1 118 81 200
Disposals -- (7) -- (7)
As at 31 December 2015 11 925 714 1,650
--------------------------- ---------------- ------------------- ---------------- -------------
As at 1 January 2016 11 925 714 1,650
Charge for the year 3 136 81 220
Disposals (11) (25) -- (36)
As at 31 December 2016 3 1,036 795 1,834
--------------------------- ---------------- ------------------- ---------------- -------------
Net Book Value
As at 31 December 2016 12 778 99 889
--------------------------- ---------------- ------------------- ---------------- -------------
As at 31 December 2015 1 674 162 837
--------------------------- ---------------- ------------------- ---------------- -------------
7. Cash and cash equivalents
31 December 31 December
Group 2016 2015
GBP000 GBP000
---------------------------------- ------------------- --------------------
Bank balances 11,869 8,036
---------------------------------- ------------------- --------------------
Cash and cash equivalents in the
statement of cash flow 11,869 8,036
---------------------------------- ------------------- --------------------
8. Capital and reserves
31 December
2015
31 December GBP000
Authorised, called up, issued and 2016
fully paid GBP000
---------------------------------------- ------------ ------------
59,408,087 ordinary shares of GBP0.001
each
(2015: 59,408,087 ordinary shares
of GBP0.001 each) 59 59
---------------------------------------- ------------ ------------
Treasury shares
The treasury shares relate to those shares purchased by the STM
Group EBT for allocation to executives. The trustees held 641,902
(2015: 530,513) shares at 31 December 2015, amounting to GBP250,818
(2015: GBP205,776).
Share premium
There were no new shares issued during the year. During 2015 a
total of 5,961,538 shares were issued for a total share premium of
GBP1,544,039.
Translation
The translation reserve comprises all foreign currency
differences arising from the translation of the financial
statements of foreign operations.
Dividends
The following dividends were declared and paid by the Group
during the year:
31 December 31 December
2016 2015
GBP000 GBP000
---------------------------------- ------------ --------------
1.4 pence per qualifying ordinary
share (2015: nil) 832 --
---------------------------------- ------------ --------------
After the respective reporting dates the following dividends
were proposed by the directors. The dividends have not been
provided for and there are no income tax consequences.
31 December 31 December
2016 2015
GBP000 GBP000
----------------------------------- ------------ --------------
1.0 pence per qualifying ordinary
share (2015: 0.9 pence) 594 535
----------------------------------- ------------ --------------
9. Earnings per share
Earnings per share for the year from 1 January 2016 to 31
December 2016 is based on the profit after taxation of GBP2,373,000
(2015: GBP2,296,000) divided by the weighted average number of
GBP0.001 ordinary shares during the year of 59,408,087 basic
(2015:- 57,562,460) and 61,250,387 dilutive (2015:- 60,598,814) in
issue.
A reconciliation of the basic and diluted number of shares used
in the year ended 31 December 2016 is:
31 December 31 December
2016 2015
GBP000 GBP000
Weighted average number of shares 59,408,087 57,562,460
Share incentive plan / convertible
loan note 1,842,300 3,036,354
------------------------------------- ------------ ------------
Diluted 61,250,387 60,598,814
------------------------------------- ------------ ------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DGGDXRGBBGRX
(END) Dow Jones Newswires
March 14, 2017 03:00 ET (07:00 GMT)
Stm (LSE:STM)
Historical Stock Chart
From Apr 2024 to May 2024
Stm (LSE:STM)
Historical Stock Chart
From May 2023 to May 2024