REG - STM Group PLC - Interim Results
30/09/2024 07:15
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RNS Number : 1155G STM Group PLC 30 September 2024
(http://www.stmgroupplc.com/) (http://www.stmgroupplc.com/)
30 September 2024
STM Group Plc
("STM", "the Company" or "the Group")
Unaudited Interim Results for the six months ended 30 June 2024
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 2024.
Financial Highlights:
2024 2024 2023 2023
(reported)
(reported)
(underlying)**
(underlying)**
Revenue £15.2m £15.2m £13.2m £13.2m
Profit before other items* £2.7m £2.9m £1.5m £1.8m
Profit before taxation ("PBT") £1.5m £1.7m £0.1m £0.4m
Profit before other items margin 18% 20% 11% 14%
Earnings per share 1.93p N/A 0.17p N/A
Cash at bank (net of borrowings) £14.6m £13.8m
Interim dividend - -
* 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:
· Significant uplift in revenue and profitability
between 2024 and 2023 arising from the change in interest sharing policy
implemented from July 2023.
· Recurring revenue consistent and resilient at 94%
of total revenues (2023: 95%).
· The Group's businesses have continued to perform in
line with management's expectations, notwithstanding the uncertainty arising
from the offer from Jambo and the wait for regulatory change of control
approvals.
· Continued focus on meeting the Consumer Duty
regulations introduced by the Financial Conduct Authority in the UK with
effect from 31 July 2023.
· Strategic exit of the Options Workplace Pension
Master Trust business to a new service provider agreed, subject to regulatory
approval.
Post-period Highlights: Update on acquisition of STM by Jambo SRC Limited
("Jambo")
· Approval for the change of control of the intended
MBO of the SIPP businesses was received from FCA in April 2024.
· The Gibraltar regulator approved the change of
control application by Jambo on 2 September 2024.
· The Malta regulator confirmed it was minded to
approve the change of control application by Jambo on 27 September 2024,
subject only to submission of the audited financial statements of the entity
funding Jambo which are expected to be available in the next few weeks;
· Once the condition for final approval by the Malta
regulator has been satisfied, and the Scheme of Arrangement is sanctioned by
the Isle of Man Court, completion of the Offer by Jambo and delisting from AIM
will take place shortly thereafter.
· Successful completion of the Offer will provide
shareholders with a minimum up-front cash consideration of 60 pence per
ordinary share, with a maximum of deferred consideration equivalent to 7 pence
per ordinary share, subject to certain conditions being satisfied.
For further information, please contact:
STM Group Plc
Alan Kentish, Chief Executive Officer Via Walbrook PR
www.stmgroupplc.com (http://www.stmgroupplc.com)
Cavendish Capital Markets Ltd (Nominated Adviser and Broker) Tel: +44 (0)20 7600 1658
Matt Goode / Emily Watts / Abigail Kelly- Corporate Finance https://www.cavendish.com (https://www.cavendish.com)
Tim Redfern - ECM
Walbrook PR Tel: +44 (0) 20 7933 8780
Tom Cooper / Joseph Walker Mob: +44 (0) 797 122 1972
STM@walbrookpr.com (mailto: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 provides UK and international
retirement solutions and life assurance products.
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
(https://urldefense.proofpoint.com/v2/url?u=http-3A__www.stmgroupplc.com&d=DwMGaQ&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=05PHl3GHdShYuaCii2fBRpoqaNr9B1d97X09daeosu0&m=PU7KD9-tYowY3PC9sXem4PQSmJ-Zm8TJB2ox4M8NHwI&s=39Vvq5Ccz7txaqksRCl4B8zUxhpd6elnqEy0XmTed50&e=)
Chairman's Statement
Whilst in previous years the Group's interim results announcements have not
contained a Chairman's statement, given the journey over the last year and the
impending finalisation of the sale of the STM Group, it feels appropriate to
set out what I believe the Plc Board and management team have achieved over
the last two years.
At the time of my accepting the appointment as Chair in August 2022, the Board
was in a state of flux and the business was very much treading water, with a
solid and predictable recurring revenue base but having been unable to grow
the bottom line significantly nor to deliver meaningful levels of new business
to transform the Group's underlying profitability.
It was for this reason that the reconstituted Plc Board took the decision to
undertake a strategic review of the business with the aid of external
consultants. Ultimately the outcome of that review to conclude that the
ability for the Group to make a step change in profitability and thrive in a
competitive environment would be dependent on its underlying technology
capabilities, amongst other factors.
As a result, the Board initiated a comprehensive review of the Group's current
and proposed technology strategy, whilst at the same time identifying that
certain businesses such as the workplace pension operation were not likely to
deliver sufficient growth to be strategically viable as a part of the Group
going forward.
As is well documented elsewhere, the Plc Board received an approach to acquire
the Group and entered into a period of negotiation with Jambo SRC Limited
("Jambo"), in July 2023, which culminated in a firm offer (the "Offer") by
Jambo to acquire 100% of the issued and to be issued share capital of the
Company, subject to certain conditions, in October 2023. The Company's
shareholders overwhelmingly approved the Offer in December 2023.
Since then, Jambo has been working with its advisers to obtain regulatory
approval for the proposed change of control from the regulators in the various
jurisdictions in which the Group operates. The approvals from the Financial
Conduct Authority ("FCA") in the UK and the Gibraltar Financial Services
Commission ("GFSC") were received as notified previously, and a minded to
approve notification from the Malta Financial Services Authority ("MFSA") was
received on 27 September 2024, conditional only on submission of the audited
financial statements of the entity that funds Jambo. These are expected to be
submitted to the MFSA in the next few weeks. Following this, an application to
the Isle of Man Court to sanction (i.e. finalise) the Scheme of Arrangement
(the "Scheme") will be made.
Ultimately, subject to the Isle of Man Court's sanction of the Scheme, which
is explained in more detail in the CEO's review, the Plc board will have
secured a minimum cash exit value of 60 pence per share for shareholders, with
a further maximum of 7 pence per share, subject to certain conditions, payable
on the twelve-month anniversary of completion of the transaction.
I, and the Plc Board, believe that this is an excellent result for our
shareholders. Whilst I believe that the predictable recurring revenue within
the Group's businesses, including the revised interest sharing policy
introduced from July 2023, together with delivery against the strategic review
undertaken previously, should have led to a gradual increase in underlying
profitability and hence in the underlying share price, this would inevitably
have taken a number of years to achieve and delivery of the strategy, once
agreed, would have been subject to potential execution risk. It should not go
unnoticed that underlying profits for the first half of 2024 have undergone a
step change in quantum compared to that of the first half of 2023, as a result
of management initiatives, particularly around the interest sharing policy.
On the expectations that Jambo will take over the ownership of STM in the near
future, it remains for me to thank my STM team and colleagues for all of their
ongoing contributions during such an unsettling period, and our shareholders
for the trust put in me and the Plc Board to deliver value in the short term.
Finally, I wish the Jambo team every success in transforming the remaining STM
businesses and the enlarged group into a mainstream pension powerhouse.
Nigel Birrell
Chairman
Chief Executive's Review
Overview
I am pleased to present the unaudited results for STM for the six months ended
30 June 2024.The underlying theme for the first half of 2024 is very much the
same as the second half of 2023, in that strategically the Group has remained
in limbo whilst awaiting the various change of control approvals to come
through from the relevant regulators, but operationally there has been a step
change in profitability compared to the first half of 2023.
As stated in my previous CEO statement in the 2023 Annual Report, the
strategic review and the subsequent technology review have been put on hold as
a result of the Offer for the Company's entire issued and to be issued share
capital by Jambo that was announced on 10 October 2023. The Offer has led to
the Board having to defer certain decisions in relation to the future
strategic direction of the Group.
The Offer was subject to regulatory approval of the change of control in
Gibraltar and Malta. The offer was also conditional on the UK SIPP businesses
completing a management buy-out immediately prior to the Court approval of the
Scheme of Arrangement (the "Scheme") by which the acquisition was to be
effected, subject to regulatory approval for change of control of the UK SIPP
businesses via the management buy-out in the UK.
The Scheme was approved at a Scheme meeting and an EGM both held on
6 December 2023, with 99.9% of Scheme shares voting to accept the Scheme
offer. As at the date of this interim report, the FCA in the UK has approved
the prospective change of control of the companies subject to the management
buy-out, such approval having been granted in April 2024, and more recently
the change of control application for Jambo was approved by the GFSC on 2
September 2024.
On 27 September 2024, the MFSA confirmed it was minded to approve the change
of control application in respect of the regulated STM Malta business, subject
only to audited financial statements of the entity funding Jambo for the year
ended 31 March 2024 being submitted to them. This condition is expected to be
satisfied within the next few weeks. The three regulatory approvals were the
only conditions precedent for completion of the Offer. Once the condition to
the MFSA approval has been satisfied, a date for a Court hearing in the Isle
of Man to finally sanction the Scheme will be arranged, and completion of the
acquisition by Jambo and the cancellation of the admission to AIM of the
Company's shares should follow within a couple of days thereafter, with the
initial cash consideration of 60 pence per ordinary share being payable within
14 days of the Scheme becoming effective.
Turning to the operations of the business, profitability for the first half of
2024 very much mirrors that in the second half of 2023, showing a profit
before taxation ("PBT") of £1.5 million and an underlying PBT before
non-recurring items of £1.7 million. Despite the distractions arising from
the ongoing acquisition process this is a very significant uplift to the first
half 2023 result of £0.1 million PBT (£0.4 million underlying PBT). As is
further explained below, the substantial increase of £2.1 million in the
interest income revenue line stemming from the introduction of the revised
interest sharing policy in the second half of 2023 has broadly compensated for
the continued shortfall in new business. The interest sharing policy is in the
process of being rolled out across the rest of the pensions businesses in
Malta and Gibraltar, having already been implemented in the UK SIPP businesses
and partly in the UK SSAS business, which will continue to contribute to
additional revenues going forward.
Notwithstanding the constraints on moving the strategic review previously
announced forward, the Group, having consulted with Jambo, was able to achieve
a satisfactory outcome for its Options Workplace Pensions Master Trust
("OWPMT") business in the first half of 2024.
The workplace pensions sector has undergone a significant amount of
consolidation in recent years and the continued pressure on margins, as well
as additional regulatory costs and burdens, means that a smaller innovative
master trust is less commercially viable. As a result, prior to the initial
approach by Jambo, the STM Board was considering the sale of the Master Trust
as part of its strategic review.
After considering the various potential partners in the market, the Group
announced on 14 June 2024 that it had signed a commercial agreement with Smart
Pension Limited ("Smart"), subject to the trustees approving Smart as the
default provider. The OWPMT Trustees approved the proposed transfer on 17 May
2024, although approval of the transfer and related transition plan by the
Pensions Regulator is still awaited as at the date of this report.
It is anticipated under the commercial agreement that the existing OWPMT
membership book will attract an overall consideration of c£4.7 million, with
a maximum possible consideration of £4.8 million, which will be paid over the
course of the next twenty-four months. In addition to the above commercial
agreement, STM also entered into an introducer agreement with Smart. The
introductory commission is capped, and a reasonable expectation would be that
the introducer agreement might generate between £1 million and £5 million of
revenue over the three-year period.
The workplace pensions business recorded revenues of £4.5 million and a
profit before tax of £0.5 million for the financial year ending 31 December
2023.
With regards to the STM Group performance, it should be noted that, pursuant
to the terms of the Offer made, all profits not paid by dividend prior to the
Offer being announced will ultimately accrue to the acquirer, and hence any
dividends declared post the Offer being announced would result in an
equivalent reduction in the value of the Offer.
Financial review
Financial performance in the period
The Group delivered total revenue in the six months to 30 June 2024 of £15.2
million (six months to 30 June 2023: £13.2 million), which included £3.0
million interest income (2023: £0.9 million). The increase in interest income
reflected the benefit derived from the implementation of the revised interest
sharing policy introduced with effect from 1 July 2023. Non-interest revenues
of £12.2 million remained broadly at prior period levels (2022: £12.3
million).
Recurring revenues, at 94% of total revenues for the period, remained
consistent and were broadly in line with the prior period (2023: 95%).
Recurring revenues for the current period including interest receivable
derived from customer funds) were £14.3 million, as compared to £12.6
million. The increase of £1.7 million reflected the increase in interest
income of £2.1 million over the prior period, less lower non-interest income
as a result of customer withdrawals and transfers out.
Operational expenses for the period were £12.5 million (2023: £11.7
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, amounting to £1.2
million (2023: £1.3 million) and relating to finance costs and the non-cash
items of depreciation and amortisation, were largely in line with management
expectations.
Reported profit before other items for the period was £2.7 million (2023:
£1.5 million), with reported profit before tax of £1.5 million (2023: £0.1
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 OTHER ITEMS PROFIT BEFORE TAX
2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m
Reported measure 15.2 13.2 2.7 1.5 1.5 0.1
Add: professional advisory costs incurred in relation to the proposed - - 0.1 - 0.1 -
acquisition of the Company
Add: senior management exit costs and other non-recurring costs - - 0.1 0.3 0.1 0.3
Underlying measure 15.2 13.2 2.9 1.8 1.7 0.4
Cashflows
Cash and cash equivalents as at 30 June 2024 were £19.1 million (30 June
2023: £18.9 million), with cash generated from operating activities being
£1.8 million (2023: £1.6 million), thus exceeding the reported profit before
tax.
During the period since 31 December 2023, the Group also repaid £0.3 million
of the secured bank loan and the outstanding balance as at 30 June 2024 was
£4.5 million (30 June 2023: £5.1 million). As a result, net cash and cash
equivalents as at 30 June 2024 amounted to £14.6 million (30 June 2023:
£13.8 million).
As would be expected for a group which is regulated in several jurisdictions,
a significant proportion of the cash balances form 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 2024 was £15.8 million (30 June 2023: £15.7 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 2024 amounted to £3.8 million (30 June 2023: £2.6 million). This
increase was largely because of the increased interest income accruals due to
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 2024 amounted to £3.8 million (30 June 2023: £4.1
million). The decrease is largely in line with the declining client base in
the Malta business. This figure also gives good visibility of revenue that is
still to be earned through the Income Statement in the coming months.
Trade receivables included within trade and other receivables as at 30 June
2024 were £3.7 million (30 June 2023: £3.5 million).
Dividend
Given the anticipated acquisition by Jambo, and the fact that any dividend
declared would be deducted from the consideration payable under the terms of
the Scheme, the Board has taken the decision not to declare an interim
dividend for the current period (2023: £Nil).
Review of operations
Pensions
The pensions administration businesses continue to be the cornerstone of our
operations.
Pensions revenue for the period was £12.7 million (2023: £11.0 million)
representing 84% (2023: 83%) of total Group revenues, with interest income
accounting for the increased revenue. Total pensions revenue arose as follows:
£4.5 million (2023: £4.6 million) from QROPS, £5.2 million (2023: £3.7
million) from the SIPP and SSAS businesses and a further £2.4 million (2023:
£2.1 million) from the workplace pensions business. In addition, the Group
also achieved a revenue contribution of £0.6 million (2023: £0.6 million)
from third party administration and Group Pension Plans.
The recurring revenue percentage for this operating segment was 95% of all
pensions revenues (2023: 96%), which, when combined with the relatively low
attrition rates, remains a solid predictor of future divisional profitability.
The various initiatives initiated to generate new business have continued to
have had poor outcomes in terms of new introducers and therefore new
applications from such sources. The Group's existing intermediary base remains
supportive of the current suite of products.
Life Assurance
Revenue for the combined Life Assurance businesses amounted to £2.2 million
which was a 16% increase over the revenue generated in the same period in 2023
(£1.9 million). In a similar manner to the pensions operating segment, the
life assurance businesses also had high levels of recurring fees, which
remained broadly stable at 92% of total life assurance revenues (2023: 94%).
Our flexible annuity products aimed at the UK market remain the key focus for
sustainable organic growth within our life businesses. In a similar manner to
the Group's pensions businesses, new business for the life companies,
particularly from new intermediaries, remains disappointing.
Regulatory Developments and Consumer Duty
During the first six months of 2024, the Group has continued to oversee the
implementation of the requirements under the Consumer Duty framework
introduced by the FCA in July 2023 for providers and adviser firms of all
sizes providing financial products or advice to consumers to measure whether
they are delivering good outcomes for UK consumers. This framework puts
greater focus on firms to ensure they are actively assessing, improving and
evidencing how they 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.
We are pleased with the progress made and, whilst there remain areas for
improvement, management are of the view that the Group continues to meet its
regulatory requirements and that its products and services are designed to
deliver good customer outcomes.
Outlook
Subject to the satisfaction of the condition attaching to the MFSA's
confirmation that it was minded to approve the change of control application
in Malta, and having now received all other relevant regulatory approvals
required to allow the completion of the transaction with Jambo, we will
shortly move into the final part of the process. A hearing to sanction the
Scheme in the Isle of Man Court will be arranged as soon as the MFSA approval
is received, with the relevant 14 days' notice of that hearing to be given
thereafter. On the assumption that the Court sanctions the Scheme, the Scheme
will become effective very shortly thereafter, resulting in the shares being
delisted from AIM and shareholders receiving the initial 60 pence cash
consideration per ordinary share held within 14 days of the effective date.
I am pleased to report that the underlying businesses have performed in line
with management's expectations during the lengthy period of instability whilst
the change of control application approvals were awaited. The close management
of business performance has been key in protecting shareholder value, not only
in relation to the 60 pence per share confirmed cash Offer but also the
deferred consideration units ("DCUs") that will be issued at completion of the
acquisition of STM by Jambo on a one to one basis for each STM share and which
will entitle the holder of each DCU to receive one redeemable loan note from
Jambo. The loan notes will be redeemable in cash at a maximum value of seven
pence each, subject to the satisfaction of certain conditions as set out in
the Scheme of Arrangement document issued to all shareholders on 7 November
2023, on the twelve month anniversary of completion of the acquisition of STM
by Jambo.
As the business is expected to transition over to Jambo ownership and
stewardship in the near future, I would like to take this opportunity to thank
all the various stakeholders of STM, and in particular the Plc board, my STM
colleagues and shareholders for their hard work, support and belief in STM.
Finally, it remains for me to wish Jambo huge success in taking the underlying
STM businesses that will remain within the Group post completion to the next
level of growth and profitability.
Alan Kentish
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period from 1 January 2024 to 30 June 2024
Note Unaudited Unaudited Audited
6 months to 6 months to Year to
30 June 30 June 31 December 2023
2024 2023 £'000
£'000 £'000
Revenue 5 15,189 13,208 28,078
Administrative expenses (12,510) (11,729) (24,878)
Profit before other items 2,679 1,479 3,200
OTHER ITEMS
Loss on revaluation of financial instruments - (36) -
Loss on disposal of fixed assets - - (96)
Finance costs (171) (302) (689)
Depreciation and amortisation (1,015) (995) (1,973)
Profit before taxation 1,493 146 442
Taxation 6 (345) (46) (25)
Profit after taxation 1,148 100 417
OTHER COMPREHENSIVE INCOME (7) (11) 32
Items that are or may be reclassified to profit and loss
Foreign currency translation differences for foreign operations
Total other comprehensive (loss)/income (7) (11) 32
Total comprehensive income for the period/year 1,141 89 449
1,148 100 417
Profit attributable to:
Owners of the Company
1,141 89 449
Total comprehensive income
attributable to:
Owners of the Company
7 1.93 0.17 0.70
Earnings per share basic (pence)
Earnings per share diluted (pence) 7 1.93 0.17 0.70
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2024
Note Unaudited Unaudited Audited
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
ASSETS
Non-current assets
Property and office equipment 1,122 933 1,304
Intangible assets 20,875 21,745 21,444
Financial assets 1,871 1,728 1,839
Deferred tax asset 6 39 51 39
Total non-current assets 23,907 24,457 24,626
Current assets
Accrued income 3,771 2,576 3,078
Trade and other receivables 10 7,059 6,901 7,349
Receivables due from insurers 19,330 488 27,441
Cash and cash equivalents 9 19,176 18,931 18,365
Total current assets 49,336 28,896 56,233
Total assets 73,243 53,353 80,859
EQUITY
Called up share capital 13 59 59 59
Share premium account 22,372 22,372 22,372
Retained earnings 15,591 14,482 14,443
Other reserves (2,286) (2,322) (2,279)
Total equity 35,736 34,591 34,595
LIABILITIES
Current liabilities
Liabilities for current tax 380 568 425
Trade and other payables 11 13,122 12,813 13,271
Provisions 19,330 488 27,441
Total current liabilities 32,832 13,869 41,137
Non-current liabilities
Other payables 12 4,399 4,566 4,808
Deferred tax liabilities 6 276 327 319
Total non-current liabilities 4,675 4,893 5,127
Total liabilities and equity 73,243 53,353 80,859
STATEMENT OF CONSOLIDATED CASHFLOW
For the period from 1 January 2024 to 30 June 2024
Note Unaudited Unaudited Audited
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Operating activities
Profit for the period/year before taxation 1,493 146 442
Adjustments for:
Depreciation of property and office equipment 232 323 620
Amortisation of intangible assets 783 672 1,353
Loss on disposal of property and office equipment - 50 96
Unrealised (gain)/loss on financial instruments (32) 36 (77)
Taxation paid (433) (337) (454)
Decrease/(increase) in trade and other receivables including insurers 8,401 1,560 (25,841)
(Increase)/decrease in accrued income (693) (1,716) (2,218)
Increase in trade and other payables including insurers (7,987) 857 28,541
Net cash generated from operating activities 1,764 1,591 2,462
Investing activities
Purchase of property and office equipment (50) (143) (170)
Increase in intangible assets (214) (292) (672)
Acquisition of non-controlling interests - (400) (400)
Additional consideration paid on prior acquisitions - - (228)
Consideration paid on acquisition of subsidiaries and portfolio - (220) -
Net cash absorbed by investing activities (264) (1,055) (1,470)
Financing activities
Repayment of bank loan (275) (275) (551)
Interest paid on bank loan (213) (190) (405)
Lease liabilities paid (194) (363) (581)
Dividends paid 8 - - (356)
Net cash absorbed by financing activities (682) (828) (1,893)
Increase/(decrease) in cash and cash 818 (292) (901)
equivalents
Reconciliation of net cash flow to movement in net funds
Effect of movements in exchange rates on cash and cash equivalents (7) (11) 32
Balance at start of period/year 9 18,365 19,234 19,234
Balance at end of period/year 9 19,176 18,931 18,365
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
For the period from 1 January 2024 to 30 June 2024
Share Share Retained Treasury Foreign Currency Translation Share Total Non-Controlling Interests Total Equity
Capital Premium Earnings Shares Reserve Based £000 £000 £000
£000 £000 £000 £000 £000 Payments Other
Reserve Reserve
£000 £000
Balance at 1 January 2023 59 22,372 14,382 (549) (81) 162 (1,375) 34,970 (68) 34,902
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Profit for the year - - 417 - - - - 417 - 417
Other comprehensive income
Foreign currency translation differences - - - - 32 - - 32 - 32
Transactions with owners, recorded directly in equity
Acquisition of non-controlling interests - - - - - - (468) (468) 68 (400)
Dividend paid - - (356) - - - - (356) - (356)
At 31 December 2023 and 1 January 2024 59 22,372 14,443 (549) (49) 162 (1,843) 34,595 - 34,595
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
Profit for the period - - 1,148 - - - - 1,148 - 1,148
Other comprehensive income
Foreign currency translation differences - - - - (7) - - (7) - (7)
At 30 June 2024 59 22,372 15,591 (549) (56) 162 (1,843) 35,736 - 35,736
NOTES TO THE CONSOLIDATED RESULTS
For the period from 1 January 2024 to 30 June 2024
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 2024 to 30 June 2024 have not been
audited. The audited consolidated financial statements of the Group for the
year ended 31 December 2023 were announced and distributed to shareholders on
27 June 2024.
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 2023. No changes in accounting policies are expected to be
reflected in the Group's consolidated financial statements for the year ending
31 December 2024.
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 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
within internal management information is based on utilisation of internally
estimated proportions. Management believes that this information and
consequently any related profitability analysis 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
6 months ended 30 June 2024 6 months ended 30 June 2023 Year ended 31 December
£'000 £'000 2023
£'000
Pensions 12,747 10,978 23,474
Life Assurance 2,162 1,937 4,039
Other Services 280 293 565
Total 15,189 13,208 28,078
Analysis of the Group's turnover information by geographical location is
detailed below:
Geographical Segment Unaudited Unaudited Audited
6 months ended 30 June 2024 6 months ended 30 June 2023 Year ended 31 December 2023
£'000 £'000 £'000
Gibraltar 3,167 2,945 6,112
Malta 3,467 3,588 7,146
United Kingdom 8,292 6,425 14,358
Other 263 250 462
Total 15,189 13,208 28,078
5. Revenue
Unaudited Unaudited Audited
6 months ended 30 June 2024 6 months ended 30 June 2023 Year ended 31 December 2023
£'000 £'000 £'000
Revenue from provision of retirement and life assurance solutions and related
administrative services
12,169 12,275 24,338
Interest and investment income 3,020 933 3,740
Total 15,189 13,208 28,078
6. Taxation
Unaudited Unaudited Audited
6 months ended 30 June 2024 6 months ended 30 June 2023 Year ended 31 December 2023
£'000 £'000 £'000
Current tax expense 388 116 91
Deferred tax expenses/(income)
- Release of deferred tax assets on leases as per IFRS16 - 7 19
- Release of deferred tax liabilities on intangible assets (43) (77) (85)
Total tax expense 345 46 25
Reconciliation of existing tax rate 2024 Unaudited 6 months ended 30 June 2024 2023 Unaudited 6 months ended 30 June 2023 2023 Audited Year ended 31 December
% £000 % £000 % 2023
£000
Profit before tax for the year - 1,493 - 146 - 442
Income tax using the Company's domestic rate 0.00% - 0.00% - 0.00% -
Effect of tax rates in other jurisdictions 25.99% 388 79.45% 116 20.59% 91
Release of deferred tax assets on leases as per IFRS 16 0.00% - 4.79% 7 4.30% 19
Release of deferred tax liabilities on intangible assets (2.88%) (43) (52.74%) (77) (19.23%) (85)
Total tax expense - 345 - 46 - 25
Effective tax rate (%) - 23.11% - 31.50% - 5.66%
The effective tax rate for UK increased to 25% from 1 April 2023. The
effective tax rates in Malta and Gibraltar are 5% and 12.5% respectively. The
Group effective tax rate in the 6 months to 30 June 2024 is in line with the
jurisdictional effective tax rate. However, in the year ended 31 December
2023, the Group effective tax rate was lower than the jurisdictional effective
tax due to the writeback of tax over provided for in prior years.
7. Earnings per share
Earnings per share for the period from 1 January 2024 to 30 June 2024 is based
on the profit after taxation of £1,148,000 (2023: £100,000) divided by the
weighted average number of £0.001 ordinary shares during the period of
59,408,088 basic and dilutive (2023: 59,408,088 basic and dilutive).
8. Dividends
There were no dividends declared or paid by the Group during the
period (2023: £Nil).
A final dividend of £356,000 or 0.60 pence per ordinary share was declared
for 2022 and paid in July 2023.
9. 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 £19,176,000 (2023:
£18,931,000).
10. Trade and other receivables
Unaudited Unaudited Audited
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Trade receivables 3,688 3,543 3,915
Prepayments 1,447 1,296 1,691
Other receivables 1,924 2,062 1,743
Total 7,059 6,901 7,349
11. Trade and other payables
Unaudited Unaudited Audited
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Deferred income 3,794 4,139 3,664
Trade payables 1,354 1,069 1,970
Bank loan (secured) 550 550 550
Lease liabilities 193 335 304
Other creditors and accruals 7,231 6,720 6,783
Total 13,122 12,813 13,271
The Company signed a credit facility with Royal Bank of Scotland
(International) Ltd for £5.50 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 £4.5 million (at 30 June 2023: £5.1
million). Interest on the loan is charged at 3.5% per annum over the Sterling
Relevant Reference Rate on the outstanding balance.
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.
12. Other payables - amounts falling due in more than a year
Unaudited Unaudited Audited
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Lease liabilities 412 28 546
Bank loan (secured) (Note 10) 3,987 4,538 4,262
Total 4,399 4,566 4,808
13. Called up share capital
Unaudited Unaudited Audited
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Authorised
100,000,000 ordinary shares of £0.001 each 100 100 100
Called up, issued and fully paid
59,408,088 ordinary shares of £0.001 each 59 59 59
14. Subsequent events
There were no subsequent events after the period end.
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