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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END
IR PPUPUBUPWGBM
(END) Dow Jones Newswires
September 28, 2023 02:00 ET (06:00 GMT)
Stm (LSE:STM)
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