TIDMSTM
RNS Number : 2711Y
STM Group PLC
08 September 2020
STM Group Plc
("STM", "the Company" or "the Group")
Unaudited Interim Results for the six months ended 30 June
2020
& 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 2020.
Financial Highlights:
2020 2020 2019 2019 (underlying)**
(reported) (underlying)** (reported)
Revenue GBP11.8m GBP11.8m GBP11.9m GBP11.6m
------------- ----------------- ------------- --------------------
Profit before other items* GBP1.8m GBP1.9m GBP2.1m GBP2.3m
------------- ----------------- ------------- --------------------
Profit before taxation GBP1.0m GBP1.1m GBP3.4m GBP1.6m
("PBT")
------------- ----------------- ------------- --------------------
Profit before other items
margin 15% 16% 18% 20%
------------- ----------------- ------------- --------------------
Earnings per share 1.33p 1.45p 5.30p 2.30p
------------- ----------------- ------------- --------------------
Cash at bank (net of borrowings) GBP17.6m N/A GBP17.3m N/A
------------- ----------------- ------------- --------------------
Interim dividend 0.55p N/A 0.75p N/A
------------- ----------------- ------------- --------------------
* Profit before other items is defined as revenue less operating
expenses i.e. profit before taxation, finance income and costs,
depreciation, amortisation, bargain purchase gain and gain on the
call options
** 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
Highlights:
-- Pensions administration business underpinning increase in recurring revenues
-- Stability of Group revenue demonstrated through the Covid-19 virus
-- Successful transition to remote working arrangements
-- Key IT projects for improved profitability remain on track
with full benefits expected in 2021
-- Carey acquisition now fully integrated, and UK rebranding of
"Options, for your tomorrow" successfully launched
-- Acquisition opportunities continue to be presented
-- UK orientated products - Shariah SIPP and Workplace Pensions
solution now launched, opportunity for international solution as
well
-- Workplace Pensions corporate business moving towards break-even
-- Flexible annuity pipeline building, but frustration in slower
than anticipated conversion
Post period end:
-- Acquisition of the Berkeley Burke Small Self Administered
Schemes ("SSAS") and Group Personal Pension ("GPP") companies,
driving UK centric business growth on scalable operating
platform
Commenting on the results and prospects for STM, Alan Kentish,
Chief Executive Officer, said:
" Covid-19 has presented challenges however the business has
responded admirably and, as anticipated, the quality of our
recurring revenue stream has under-pinned our half year results.
The challenge and opportunity for us over the next 12 months is to
accelerate the conversion to revenue of our healthy new business
pipeline, particularly in relation to our flexible annuity
product.
"Within the business, as part of our new operating model and
drive for improved margins, I am pleased to confirm that our key IT
projects remain on track with regards to scheduled completion,
which we expect to lead to a step change in profitability in
2021.
"The recent acquisition of the Berkeley Burke SSAS and GPP
companies are a welcome addition to the UK business portfolio, and
demonstrates our commitment to further building our UK operations
and delivering on our growth potential. In addition, we continue to
pursue acquisition opportunities where we are in active
discussions. "
Investor Presentation: 4pm on Thursday 10 September 2020
The Directors will hold a presentation to introduce STM Group
Plc to investors and cover the Interim Results and prospects at
4.00 p.m. on Thursday 10 September 2020.
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.
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 Officer Via Walbrook PR
Therese Neish, Chief Financial Officer www.stmgroupplc.com
finnCap Tel: +44 (0)20 7600 1658
Matt Goode / Emily Watts - Corporate Finance www.finncap.com
Tim Redfern / Richard Chambers - ECM
Media enquiries:
Walbrook PR Tel: +44 (0) 20 7933 8780
Tom Cooper / Paul Vann 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 AIM, a market operated by 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 the UK, Gibraltar, Malta, Jersey
and Spain. 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 Self-Invested
Personal Pensions (SIPPs) for expatriates, Qualifying Recognised
Overseas Pension Schemes (QROPS), Qualifying Non UK Pension Schemes
(QNUPS). STM has two Gibraltar Life Assurance Companies which
provide life insurance bonds - wrappers in which a variety of
investments, including investment funds, can be held.
Further information on STM Group Plc can be found at
www.stmgroupplc.com .
Chairman's Statement
I am pleased to present the results for the first six months of
2020 where the Covid-19 virus has brought with it many challenges,
not only for STM and our stakeholders but to the worldwide
financial sector in general.
We are proud that the nature of our business has meant that both
our revenue base and cost base have remained relatively stable,
with only a small loss to our existing revenue stream whilst
reporting high levels of recurring revenues. Also, as part of our
business continuity strategy we have continued to put the safety of
our staff at the heart of our plans and I am pleased and proud of
how it has gone so far.
However, and frustratingly, our new business flows from various
areas of the Group are materialising slower than we would have
liked, especially in the flexible annuities and workplace pension
areas. Whilst we believe this is a timing issue that would appear
to be primarily driven by Covid-19, it does put pressure on our
likely performance in the second half of 2020 with some
consequential impact on our 2021 financial year.
I have now been in tenure as Chairman for two years, and am
pleased to say that we are continuing to make progress in many key
areas, including building both a stronger leadership structure and
business support infrastructure in addition to our critical
investment in IT that will soon improve both our operating margins
and customers' experience. This, coupled with a step change in our
focus on bringing in new business and further resources for new
product development, will bring a strong performance in 2021.
As a board, we continue to look for acquisition opportunities
that will support and complement our organic growth plans. The
recent Berkeley Burke acquisition completed in August fits such a
criteria adding both a Small Self Administered Scheme (" SSAS") and
Group Personal Pension ("GPP") portfolio.
In summary, it has been a challenging 2020 so far, largely due
to Covid-19 impacts but we are looking forward with improved
strategic clarity, strong priority focus and disciplined execution.
I look forward to updating the market with our future developments
and achievements at the appropriate time.
Duncan Crocker
Chairman
Chief Executive's Review
Overview
Along with all businesses, STM Group has had to navigate through
unprecedented times as a result of the Covid-19 pandemic. These
challenges encompass changes to how we do business, how we
communicate with our customers and intermediaries, as well as our
own colleagues. However, we have demonstrated that our business
model is robust, and the implementation of our business continuity
plans has meant that we continue to meet expected service standards
for our customers.
As anticipated, the quality of our recurring revenue stream has
under-pinned our half year results, with only a very small element
of our fees being dependent on assets under management or driven by
interest rates.
Covid-19 has however had an impact on our new business
expectations in that we have seen delays in the take-up of certain
product offerings. This is particularly apparent in our recently
launched flexible annuity product and bulk transfers to our
workplace pension master trust, albeit in both cases we see this as
a matter of timing rather than lost business.
As part of our new operating model, and drive for improved
margins, I am pleased to confirm that our key IT projects remain on
track with regards to scheduled completion.
I am also pleased to note that during the period an agreement
was reached between the STM Group Gibraltar regulated companies
that formed part of the Skilled Persons Review in 2018 and the
Gibraltar Financial Services Commission. This concluded that all
remediation and action points identified during the Skilled Persons
Review have now been implemented and no further action is
contemplated.
The recent acquisition of the Berkeley Burke SSAS and GPP
companies are a welcome addition to the UK business portfolio, and
demonstrates our commitment to further building our UK
operations.
Financial review
Financial performance in the period
The Group has reported revenues for the first half of the year
of GBP11.8 million (2019: GBP11.9 million), with underlying revenue
being GBP0.2m up on 2019 figure of GBP11.6m after stripping out the
2019 adjustments of the technical reserve release from the life
assurance company and the accounting policy adjustment on the Carey
acquisition.
Recurring revenues for the period have increased by 15% to
GBP10.0 million (2019: GBP8.7 million), now representing 85% of
total revenues (2019: 73%). These high levels of recurring revenues
remain a key performance measure for the business and demonstrate
the quality of the Group's revenues.
Profit before other items for the period is GBP1.8 million
(2019: GBP2.1 million) with reported profit before tax of GBP1.0
million (2019: GBP3.4 million). However, as was the case with
revenue there were a number of adjustments included in last year's
figures, largely due to the Carey acquisition. Thus the underlying
profit before other items is GBP1.9 million (2019: GBP2.3 million)
and underlying profit before tax of GBP1.1 million (2019: GBP1.6
million).
The decrease in underlying profitability is largely as a result
of the higher professional indemnity insurance premiums which were
introduced in September 2019 thus were not included in the first 6
months of 2019; and with some additional personnel costs also
commencing in July 2019 to finalise the key recruits under the new
operating model. This increase in costs has resulted in a decrease
in underlying profit margins to 16% for profit before other items
as compared to 20% for the first half of 2019. The investment in
the Group's systems and IT infrastructure together with continued
increase in business revenues is expected to result in improved
margins for 2021 and beyond.
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
------------- ---------------- ----------------
2020 2019 2020 2019 2020 2019
----- ------ ------- ------- ------- -------
GBPm GBPm GBPm GBPm GBPm GBPm
----- ------ ------- ------- ------- -------
Reported measure 11.8 11.9 1.8 2.1 1.0 3.4
----- ------ ------- ------- ------- -------
Less: release on technical
reserve - (0.9) - (0.9) - (0.9)
----- ------ ------- ------- ------- -------
Less: adjustment on Carey
revenue recognition - 0.6 - 0.6 - 0.6
----- ------ ------- ------- ------- -------
Add: integration and acquisition
costs for H1 - - 0.1 0.3 0.1 0.3
----- ------ ------- ------- ------- -------
Add: other non-recurring costs - - - 0.3 - 0.3
----- ------ ------- ------- ------- -------
Less: bargain purchase gain
and derivative asset - - - - - (2.0)
----- ------ ------- ------- ------- -------
Underlying measure 11.8 11.6 1.9 2.3 1.1 1.6
----- ------ ------- ------- ------- -------
Cashflows
Cash and cash equivalents at 30 June 2020 were GBP18.3 million
(2019: GBP18.1 million) with cash generated from operating
activities being GBP1.7 million (2019: GBP2.2 million) thus
exceeding our reported profit before tax.
During the period we repaid GBP0.5 million of our bank loan
leaving a balance of GBP0.7 million outstanding and due to be fully
repaid by October (2019: GBP0.8 million). Net cash and cash
equivalents as at 30 June 2020 were therefore GBP17.6 million
(2019: GBP17.3 million).
As would be expected for a Group regulated in a number of
jurisdictions, a significant proportion of this 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 be used to
support the regulatory solvency requirement. The total regulatory
capital requirement across the Group as at 30 June 2020 is GBP18.6
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 GBP1.7 million as at
the period end (2019: GBP1.1 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 GBP4.4 million (2019: GBP4.7 million).
This figure 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 2020 were GBP3.2 million showing
an increase from the position as at 30 June 2019 of GBP2.5
million.
Dividend
In line with the more prudent approach adopted by the Board with
regards to the 2019 final dividend, the Board has considered the
unprecedented times in conjunction with the robustness of the
Group's business model. As such I am pleased to announce that the
Board has declared an interim dividend of 0.55 pence per share
(2019: 0.75 pence). The interim dividend is expected to be paid on
19 November 2020 to those shareholders on the register on 23
October 2020. The ordinary shares will become ex-dividend on 22
October 2020.
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, with the 2019 acquisition of the
Carey pension business giving us a stronger platform for growth in
the UK market.
Overall the pensions revenue for the period was GBP7.9 million
(2019: GBP6.8 million) representing 67% (2019: 57%) of total Group
revenues. Total revenue is split between GBP5.1 million for QROPS
(2019: GBP5.0 million), GBP1.9 million (2019: GBP1.3 million) for
the SIPP business and a further GBP1.0 million (2019: GBP0.5
million) for the workplace pensions business.
The recurring revenue percentage for this operating segment
continues to increase at 93% (2019: 90%) for the period. This
combined with low attrition rates means that it remains a solid
predictor of future divisional profitability.
New business applications for QROPS and SIPPs have seen an
increase from the same period last year at 473 (2019: 349). This
increase is largely within our UK SIPP business which is now being
marketed under our new UK brand "Options, for your tomorrow".
The final pensions revenue stream within the Group is the
auto-enrolment business acquired as part of the Carey acquisition,
now branded Options Corporate. Whilst this business has seen circa
30,000 new members in the first six months; the levels of new
business are not as high as management were originally expecting.
This is very much a direct impact of the global pandemic causing
employers to delay the transfer of schemes during lockdown. We
remain confident that this is purely a delay rather than potential
new business being diverted elsewhere.
The UK businesses have seen significant change operationally
during the first six months of the year, with all administration
now being carried out from our Milton Keynes office. In addition,
both the SIPP and auto-enrolment businesses are in the process of
migrating onto new administration software.
In relation to the UK pension sector, there was welcome clarity
from the judgment handed down on the Adams vs Carey case, with all
points found in favour of Carey. It remains to be seen whether
leave to Appeal will be granted, and to what extent the Financial
Ombudsman and Regulator will consider this new legal precedent when
reviewing complaints against SIPP providers.
Life assurance
Revenue for the combined life assurance businesses amounted to
GBP2.0 million as compared to GBP2.8 million in 2019. This decrease
is largely due to the 2019 figures including the final release of
the technical reserve of GBP0.9 million. Net of this adjustment
revenue in 2019 was GBP1.9 million.
In a similar manner to the pensions operating segment, our life
assurance business also has high recurring fees. Whilst in absolute
numbers this is only slightly higher than last year at GBP1.9
million (2019: GBP1.7 million) the percentage value (as compared to
total divisional revenues) is significantly higher at 95% (2019:
62%) given that there are no further technical reserve
releases.
Ongoing work continues in relation to the project to merge the
two life companies . T his is made more complicated due to STM Life
having written a number of life assurance policies for EU resident
individuals.
The launch of our flexible annuity products aimed at the UK
market remain the key focus for organic growth within our life
businesses. Our pipeline of potential new business continues to
grow, albeit, as mentioned above there remains frustration at the
length of time for that to convert into new business. In addition,
we continue to look to build our UK intermediary base to promote
our flexible annuity product.
Corporate and Trust Services ("CTS")
Revenue from the Corporate and Trustee Services division for the
period was GBP1.6 million (2019: GBP1.9 million) , thus accounting
for 14% of the Group's total revenues (2019: 16%).
Our Gibraltar business contributed 52% (2019: 46%) of this
revenue, with Jersey contributing the other 48% (2019: 54%).
Recurring revenue for the CTS operating segment was consistent
with the prior year's figure at GBP0.6 million and thus 38% of the
total CTS revenues (2019: 33%).
As noted in previous year's reports, the CTS environment and
sector remains challenging, and it is fully recognised by the Group
that this will be a difficult division to grow organically.
Other divisions
Having closed down the insurance management division in March
2019, this revenue now relates solely to the Spanish office which
has performed in line with management expectations. Revenue for
this operating segment for the period amounted to GBP0.3 million
and thus a slight decrease compared to last year (2019: GBP0.5
million).
Covid-19
There is no doubt that Covid-19 has changed the face of how many
businesses operate. During these unprecedented times, our key
criteria has been to ensure the welfare of our colleagues, whilst
maintain service levels to all our stakeholders, not just our
customers and intermediaries. As a result, our working practices
have evolved and we will ensure that, where appropriate, we learn
from these different ways of working.
We are continuing to follow the various governmental guidelines
in each of the jurisdictions that we operate from, and have adopted
a phased return to workplace policy.
Whilst there have been disruptions to our colleagues working
conditions as they quickly adapted to remote working almost without
warning, the transition was done with professionalism and
commitment. My heartfelt thanks goes to each and every one of them
for their resilience and positivity throughout this year.
Post period end events
Since the period end and as per our announcement of 13 August
2020 we have acquired 100% of the share capital of Berkeley Burke
(Financial Services) Limited and Berkeley Burke Employee Benefits
Consultants Limited. These companies provide administration and
consultancy services to Small Self-administered Pension Schemes in
the UK and to large and medium sized UK and International
businesses. The acquisition comes with good quality portfolio of
clients as well as competent and qualified staff, which will
complement STM's existing business.
In addition, we continue to pursue acquisition
opportunities.
Outlook
A key focus for the second half of the year, and into 2021, is
accelerating our new business activity for new products, which for
the reasons given above, is behind management's expectations.
Understandably, some of this timing delay is down to the disruption
caused by Covid-19. With our recent launch of additional new
pension product offerings for both SIPPs and the workplace pension
aimed at the Shariah market, we are confident that these will start
to fill some of the shortfall. We continue to look at ways to
enhance and market our products to proactively serve our target
market and deliver future growth.
We expect that 2021 will see a step-change in profitability due
to improved operating margins as our investment in IT initiatives
start to bear fruit, and our Options workplace pension business
moves from a loss making position into profitability.
We look forward to updating the market as and when we deliver on
these opportunities.
Alan Kentish
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
For the period from 1 January 2020 to 30 June 2020
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2020 2019 2019
Notes GBP'000 GBP'000 GBP'000
Revenue 4 11,810 11,945 23,251
Administrative expenses (10,002) (9,883) (19,776)
---------------------------------- ------ ---------- ---------- -------------
Profit before other items 1,808 2,062 3,475
---------------------------------- ------ ---------- ---------- -------------
OTHER ITEMS
Bargain purchase gain - 1,630 1,702
Gains from financial instruments
at FVTPL - 416 416
Finance costs (126) (153) (325)
Depreciation and amortisation (669) (593) (1,345)
---------------------------------- ------ ---------- ---------- -------------
Profit before taxation 1,013 3,362 3,923
---------------------------------- ------ ---------- ---------- -------------
Taxation (224) (214) (520)
---------------------------------- ------ ---------- ---------- -------------
Profit after taxation 789 3,148 3,403
OTHER COMPREHENSIVE INCOME
Items that are or may
be reclassified to profit
and loss
Foreign currency translation
differences for foreign
operations 16 (51) (97)
----------------------------------- ------ ---------- ---------- -------------
Total other comprehensive
income/(loss) 16 (51) (97)
----------------------------------- ------ ---------- ---------- -------------
Total comprehensive income
for the period/year 805 3,097 3,306
---------------------------------- ------ ---------- ---------- -------------
Profit attributable to:
Owners of the Company 861 3,301 3,756
Non-Controlling interests (72) (153) (353)
---------------------------------- ------ ---------- ---------- -------------
789 3,148 3,403
---------------------------------- ------ ---------- ---------- -------------
Total comprehensive income
attributable to:
Owners of the Company 877 3,250 3,659
Non-Controlling interests (72) (153) (353)
---------------------------------- ------ ---------- ---------- -------------
805 3,097 3,306
---------------------------------- ------ ---------- ---------- -------------
Earnings per share basic
(pence) 5 1.33 5.30 5.73
Earnings per share diluted
(pence) 5 1.33 5.13 5.64
---------------------------------- ------ ---------- ---------- -------------
The results for the period from 1 January 2020 to 30 June 2020
relate to continuing activities. The results for the period from 1
January 2019 to 30 June 2019 include both continuing activities and
discontinued operation (see Note 6).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
Unaudited Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
Notes GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 2,596 2,783 2,953
Intangible assets 20,634 20,733 20,488
Financial assets at FVTPL 416 416 416
Deferred tax asset 84 98 92
Total non-current assets 23,730 24,030 23,949
------------------------------- ------ ---------- ---------- -------------
Current assets
Accrued income 1,692 1,138 1,186
Trade and other receivables 9 5,062 4,976 5,765
Cash and cash equivalents 8 18,279 18,137 18,406
------------------------------- ------ ---------- ---------- -------------
Total current assets 25,033 24,251 25,357
------------------------------- ------ ---------- ---------- -------------
Total assets 48,763 48,281 49,306
------------------------------- ------ ---------- ---------- -------------
EQUITY
Called up share capital 12 59 59 59
Share premium account 22,372 22,372 22,372
Retained earnings 12,951 12,526 12,536
Other Reserves (430) (399) (446)
------------------------------- ------ ---------- ---------- -------------
Equity attributable to
owners of the Company 34,952 34,558 34,521
Non-controlling interests (347) (78) (275)
------------------------------- ------ ---------- ---------- -------------
Total equity 34,605 34,480 34,246
------------------------------- ------ ---------- ---------- -------------
LIABILITIES
Current liabilities
Liabilities for current
tax 1,216 888 1,083
Trade and other payables 10 10,944 10,646 11,634
------------------------------- ------ ---------- ---------- -------------
Total current liabilities 12,160 11,534 12,717
------------------------------- ------ ---------- ---------- -------------
Non-current liabilities
Other payables 11 1,998 2,267 2,343
------------------------------- ------ ---------- ---------- -------------
Total non-current liabilities 1,998 2,267 2,343
------------------------------- ------ ---------- ---------- -------------
Total liabilities and equity 48,763 48,281 49,306
------------------------------- ------ ---------- ---------- -------------
CONSOLIDATED CASH FLOW STATEMENT
For the period from 1 January 2020 to 30 June 2020
Unaudited Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
Notes GBP'000 GBP'000 GBP'000
Operating Activities
Profit for the period/year before
tax 1,013 3,362 3,923
Adjustments for:
Depreciation of property, plant
and equipment 398 347 773
Amortisation of intangible assets 271 246 572
Write-off of intangible assets - - 71
Loss on sale of fixed asset - 2 5
Taxation paid (100) (234) (345)
Bargain purchase gain - (1,630) (1,702)
Unrealised gains on financial
instruments at FVTPL - (416) (416)
Share based payments - 18 18
Decrease in trade and other receivables 703 1,592 827
Increase in accrued income (506) (254) (301)
Decrease in trade and other payables (96) (808) (326)
Net cash from operating activities 1,683 2,225 3,099
----------------------------------------- ------ ---------- ---------- -------------
Investing activities
Disposal of investments - 74 74
Purchase of property, plant and
equipment (40) (88) (117)
Increase in intangible assets (417) (46) (160)
Consideration paid on acquisition
of subsidiary - (350) (350)
Cash acquired on acquisition of
Subsidiary - 1,116 1,116
Net cash used in investing activities (457) 706 563
----------------------------------------- ------ ---------- ---------- -------------
Cash flows from financing activities
----------------------------------------- ------ ---------- ---------- -------------
Proceeds from Bank loans - - 1,200
Bank loan repayment (500) (825) (1,650)
Lease liabilities paid (444) (358) (745)
Treasury shares purchased - (117) (117)
Dividends paid 7 (446) (772) (1,218)
Net cash from financing activities (1,390) (2,072) (2,530)
----------------------------------------- ------ ---------- ---------- -------------
(Decrease)/increase in cash and
cash
equivalents (164) 859 1,132
----------------------------------------- ------ ---------- ---------- -------------
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 (164) 859 1,132
Effect of movements in exchange
rates on cash and cash equivalents 38 11 7
Balance at start of period/year 18,406 17,267 17,267
Balance at end of period/year 18,279 18,137 18,406
----------------------------------------- ------ ---------- ---------- -------------
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
For the period from 1 January 2019 to 30 June 2019
Shares
Based Non-Controlling
Share Share Retained Treasury Translation Payments Interests Total
Capital Premium Earnings Shares Reserve Reserve Total GBP'000 Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance
at
1 January
2019 59 22,372 9,998 (432) 38 144 32,179 - 32,179
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
Profit for
the period - - 3,756 - - - 3,756 (353) 3,403
Other comprehensive income
Foreign
currency
translation
differences - - - - (97) - (97) - (97)
Transactions with owners, recorded directly in equity
Dividend
paid - - (1,218) - - - (1,218) - (1,218)
Treasury
shares
purchased - - - (117) - - (117) - (117)
Share based
payments - - - - - 18 18 - 18
Changes in ownership interest
- - - - - - - 78 78
-------------- --------- --------- ---------- ---------- ------------- --------- ----------------------- ----------------- ---------
At 31
December
2019 and
1 January
2020 59 22,372 12,536 (549) (59) 162 34,521 (275) 34,246
-------------- --------- --------- ---------- ---------- ------------- --------- ----------------------- ----------------- ---------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
Profit for
the period - - 861 - - - 861 (72) 789
Other comprehensive income
Foreign
currency
translation
differences - - - - 16 - 16 - 16
Transactions with owners, recorded directly in equity
Dividend
paid - - (446) - - - (446) - (446)
Treasury
shares
purchased - - - - - - - - -
Share based
payments - - - - - - - - -
At 30 June
2020 59 22,372 12,951 (549) (43) 162 34,952 (347) 34,605
-------------- --------- --------- ---------- ---------- ------------- --------- ----------------------- ----------------- ---------
NOTES TO THE CONSOLIDATED RESULTS
For the period from 1 January 2020 to 30 June 2020
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 2020 to 30 June 2020 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 2019. No changes in
accounting policies are expected to be reflected in the Group's
consolidated financial statements for the year ended 31 December
2020.
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 believe 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 2020 6m 2019 2019
GBP'000 GBP'000 GBP'000
Pensions 7,930 6,760 14,074
Life Assurance 1,945 2,798 4,768
Corporate Trustee Services 1,613 1,881 3,662
Other Services 322 506 747
---------------------------- ---------- ---------- ---------
11,810 11,945 23,251
---------------------------- ---------- ---------- ---------
Analysis of the Group's turnover information by geographical
location is detailed below:
Geographical Segment Unaudited Unaudited Audited
6m 2020 6m 2019 2019
GBP'000 GBP'000 GBP'000
Gibraltar 4,080 5,144 9,329
Malta 3,855 3,750 7,542
United Kingdom 2,828 1,739 3,964
Jersey 773 1,011 1,901
Other 274 301 515
---------------------- ---------- ---------- ---------
11,810 11,945 23,251
---------------------- ---------- ---------- ---------
5. Earnings per Share
Earnings per share for the period from 1 January 2020 to 30 June
2020 is based on the profit after taxation of GBP789,000 divided by
the weighted average number of GBP0.001 ordinary shares during the
period of 59,408,088 basic. Dilutive share options expired one
month after the Company announced its 2018 results, no options were
exercised.
A reconciliation of the basic and diluted number of shares used
in the period ended 30 June 2020 and 30 June 2019 is as
follows:
2020 2019
Weighted average number of shares 59,408,088 59,408,088
Share incentive plan - 1,915,343
Diluted 59,408,088 60,365,759
=================================== =========== ===========
6. Discontinued operation
In March 2019, the Group closed down its Insurance management
business. Management committed to a plan to cease trading for this
part of the segment following an assessment of the viability of the
insurance management business and its alignment with the Group's
long term strategy to focus on its core activities.
This other services segment, of which the insurance management
business was a part of, was not previously classified as
held-for-sale or as a discontinued operation.
There are no results for the discontinued operation included in
the six month period ended 30 June 2020. Results of the
discontinued operation are as follows for both the six month ended
30 June 2019 and the year ended 31 December 2019:
GBP'000
Revenue 179
Expenditure (140)
Results from operating activities 39
Income tax (3)
Results from operating activities,
net of tax 36
Gain on sale of discontinued operation -
Profit from discontinued operation 36
---------------------------------------- --------
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
2020 2019 2019
GBP'000 GBP'000 GBP'000
0.75 pence (2019: 1.3 pence) per qualifying
ordinary share 446 772 446
---------- ---------- -------------
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 GBP18,279,000.
9. Trade and other receivables
Unaudited Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
Trade receivables 3,236 2,524 3,908
Prepayments 879 956 621
Other receivables 947 1,496 1,236
-------------------
Total 5,062 4,976 5,765
------------------- ---------- ---------- -------------
10. Trade and other payables
Unaudited Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
Deferred income 4,369 4,662 4,193
Trade payables 659 445 466
Bank loan 700 825 1,200
Lease liabilities 788 652 795
Contingent consideration - 100 39
Other creditors and accruals 4,428 3,962 4,941
---------- ----------
10,944 10,646 11,634
---------- ---------- -------------
In October 2019 the Company took out a one year loan for GBP1.20
million with quarterly instalments which pays interest of 4% above
LIBOR. This loan is secured by a capital guarantee provided by STM
Fidecs Limited.
In October 2016 the Company took out a 3 year bank loan for
GBP3.30 million which pays interest of 4% above LIBOR. The bank
loan was interest only for the first year with quarterly repayments
thereafter commencing in January 2018 and this was fully repaid
during 2019.
11. Other payables - amounts falling due in more than a year
Unaudited Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
Lease liabilities 1,508 1,835 1,889
Deferred tax liabilities 279 329 295
Provisions for dilapidation costs 211 103 159
1,998 2,267 2,343
---------- ---------- -------------
12. Called up share capital
Unaudited Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
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. Post balance sheet event
Subsequent to the period end, on 13 August 2020 the Company
acquired 100% of the share capital of Berkeley Burke (Financial
Services) Limited and Berkeley Burke Employee Benefits Consultants
Limited. These companies provide administration and consultancy
services to Small Self-administered Pension Schemes in the UK and
to large and medium sized UK and International businesses. The
acquisition comes with good quality portfolio of clients as well as
competent and qualified staff, which will complement STM's existing
business.
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END
IR SSDFMWESSESU
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