REG - STM Group PLC - Interim Results & Investor Presentation

STMAnnouncement

14/09/2021 07:01

RNS Number : 6223L
  
STM Group PLC
  
14 September 2021
  
 

 
STM Group Plc
("STM", "the Company" or "the Group")
Unaudited Interim Results for the six months ended 30 June 2021
& 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 2021.
Financial Highlights:




 


2021

(reported)


2021

(underlying)**


2020

(reported)


2020

(underlying)**




Revenue


£11.4m


£11.4m


£11.8m


£11.8m




Profit before other items*


£1.5m


£1.7m


£1.8m


£1.9m




Profit before taxation ("PBT") 


£0.9m


£0.8m


£1.0m


£1.1m




Profit before other items margin


13%


15%


15%


16%




Earnings per share


1.28p


N/A


1.33p


N/A




Cash at bank (net of borrowings)


£16.5m
 


£17.6m
 




Interim dividend


0.60p


0.55p




* 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:
·             Recurring revenue remains predictable and a cornerstone of the business, and now represents 88% of the Group's reported revenue 
·             Disinvestment of both CTS businesses allowing the Board to concentrate on growing our core activities
·             Strategic focus on updating and revising operating model to drive increased "topline" growth 
·             Three of four IT projects now gone "live" with intention of having two core administration systems - improving operating margins
·             Adapted to a "hybrid" working environment to keep our colleagues safe and maximise flexibility and efficiencies
·             The Berkeley Burke acquisition of August 2020 is now fully integrated and delivering the profit that was anticipated
·             Acquisitions are a core pillar of our growth strategy
 
Commenting on the results and prospects, Alan Kentish, Chief Executive Officer at STM, said:
"The first six months of the year have been busy with two disposals and three of the four key IT projects having gone "live".  As one would expect with our business model, the recurring revenue nature of our pensions and life assurance businesses underpins the predictability of our performance, with some 88% of total revenue meeting this classification.  
"The simplification of our overall Group structure and our business lines remains a focus of the Plc board, and we are pleased to be able to state that we have now exited the Trust and Corporate Services sector, having found good homes for both the Gibraltar and Jersey clients and colleagues. The Berkeley Burke acquisition of August last year is now fully integrated and delivering the profit that was anticipated.
"There continues to be a strong appetite for further acquisitions as a key pillar for revenue and profit growth, to sit alongside the organic growth opportunities. 
"We look forward to updating shareholders with our progress in the near future." 
 
Investor Presentation: 1.30pm on Wednesday 15 September 2021
The Directors will hold a presentation to introduce STM Group Plc to investors and cover the Interim Results and prospects at 1.30 p.m. on Wednesday 15 September 2021. 
 
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. 
 
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (as it forms part of retained EU law as defined in the European Union (Withdrawal) Act 2018).
 
 
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
Tim Redfern / Richard Chambers - ECM


www.finncap.com 




 
Media enquiries:




Walbrook PR


Tel: +44 (0) 20 7933 8780




Tom Cooper / Paul Vann


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 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 focussed on both organic initiatives and strategic acquisitions.
 
Further information on STM Group can be found at www.stmgroupplc.com
 
 
 
Chairman's Statement
I am pleased to present the results for the first six months of 2021. It has been a period of considerable actual and ongoing evolution within the Group against a backdrop of the continuing challenges of the pandemic, where we continue to support all our colleagues, clients and stakeholders. This backdrop has been made all the more challenging as it has coincided with us finalising a number of major IT migration projects, which will ultimately move the Group to a healthier operating margin.
The recurring revenue base has held up well and continues to form our foundation stone for building our new business revenues, which is our stated strategic priority. Revenue (excluding discontinued operations) grew year on year by 3.9% although the first half of 2021 was relatively disappointing with regards to new business volumes in certain areas, with some partnership arrangements being slower to come to fruition than expected. The Group has, however, maintained its overall profitability through prudent and agile attention to our resourcing and cost base.
We continue to realign our business to be more focused on revenue growth and are now making real tangible changes to our operating model to support this strong ambition. The investment that we have made in the infrastructure over the last few years gives us confidence that we are able to cope with accelerating our revenue growth and improve operating margins by sweating our existing infrastructure and capability.
Board Evolution
Going into the second half of 2021, our operating model changes further as we move down to a two-person Plc executive team, and the creation of a dedicated senior Group role for business development, which will be a non-Board post. We will continue to proactively review our top to toe governance structure and also our stated risk appetite profile so as to ensure that it is conducive to our stated top and bottom line growth expectations.
I must express my deepest thanks to Therese Neish and Pete Marr for their huge contribution to the Group over the years, both of whom will be stepping down from the Board before my next Chairman's report.
Finally, I would like to take the opportunity to thank all my STM colleagues for their continuing hard work in a complicated and unpredictable working environment. 
Duncan Crocker
Chairman
 
 
 
Chief Executive's Review
Overview 
The first six months of the year have been busy with two disposals and the completion of some important IT projects. In operational terms the business has, overall, performed in line with management's expectations. 
Our UK workplace pensions business delivered higher than anticipated revenues, although new business revenue overall was slower than was expected, particularly around UK SIPP business and our flexible annuity product. In addition, our cost base was managed accordingly. 
As one would expect with our business model, the recurring revenue nature of our pensions and life assurance businesses underpins the predictability of our performance, with some 88% of total revenue meeting this classification.  
The delivery of our key IT projects is now well underway, with three of the four projects now having gone "live". Whilst there is still development work to be completed, we have moved a very significant step forward to our strategic aim of having one administration platform for our private pensions and life businesses, and one platform for our workplace and occupational pensions. We believe that moving into 2022, we will see improved operating margins as a result of these administration platforms, and that they will help the Group to differentiate itself from others in the marketplace. 
The simplification of our overall Group structure and our business lines remains a focus of the Plc board, and we are pleased to be able to state that we have now exited the Trust and Corporate Services sector, having found good homes for both the Gibraltar and Jersey clients and colleagues. The Berkeley Burke acquisition of August last year is now fully integrated and delivering the profit that was anticipated at the time of acquisition.
 
Financial review
Financial performance in the period
The Group delivered revenue growth from continuing operations of 3.9% from £10.2 million in 2020 to £10.6 million) with growth in revenues from our Pensions division offset by a slight reduction in our Life assurance division.  Reported revenues for the first half of the year were £11.4 million (2020: £11.8 million) with the main reason for the decrease being as a result of the disposals of the Group's corporate & trustee services ("CTS") businesses earlier in the year. Revenue contribution from these businesses accounted for £1.6 million in 2020 as compared to £0.8 million in the period from 1 January 2021 to the respective dates of disposal. 
Recurring revenues for the period have remained consistent at £10.0 million (2020: £10.0 million), representing 88% of total revenues (2020: 85%). The sale of the CTS business has contributed to a higher percentage given that CTS businesses had a high proportion of transactional based revenue which was not considered recurring as this was less predictable than the fixed fees generated from the pensions and life assurance businesses. These high levels of recurring revenues remain an important key performance measure for the business and demonstrate the quality of the Group's revenues.
Profit before other items for the period is £1.5 million (2020: £1.8 million) with reported profit before tax of £0.9 million (2020: £1.0 million). However, during the period there have been a number of one-off and non-recurring costs such as costs associated with internal restructures and a capital management review engagement. Thus, the underlying profit before other items is £1.7 million (2020: £1.9 million) and underlying profit before tax of £0.8 million (2020: £1.0 million).
In line with revenue, the reason for the decrease in profitability is largely down to the sale of the CTS businesses. Whilst not significant these sales have resulted in the loss of profit contribution and in addition to this some of the centralised costs having to be absorbed by the wider Group. 
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




 


2021


2020


2021


2020


2021


2020




 


£m


£m


£m


£m


£m


£m




 


 


 


 


 


 


 




Reported measure


11.4


11.8


1.5


1.8


0.9


1.0




 


 


 


 


 


 


 




Add: integration and acquisition costs for H1


-


-


-


0.1


-


0.1




Add: other non-recurring costs


-


-


0.2


-


0.2


-




Less: gain on sale of investments


-


-


-


-


(0.1)


 




Less: bargain purchase gain and derivative asset


-


-


-


-


(0.2)


-




Underlying measure


11.4


11.8


1.7


1.9


0.8


1.1




 
Cashflows
Cash and cash equivalents at 30 June 2021 were £18.6 million (2020: £18.3 million) with cash generated from operating activities being £1.2 million (2020: £1.7 million) thus exceeding our reported profit before tax. 
Whilst cash balances have remained fairly consistent as compared to the same period for the prior year they have increased since the year end. This is largely as a result of the sales of the two CTS businesses earlier in the year. These disposals generated net cash inflows of £1.6 million.
During the period we also repaid £0.3 million of our bank loan with £1.3 million still outstanding. Net cash and cash equivalents as at 30 June 2021 were therefore £17.3 million (2020: £17.6 million).  The Group has a credit facility in place with £3.9 million available to be drawn down for acquisitions and other growth opportunities. 
As would be expected for a Group regulated in a number of jurisdictions, a significant proportion of our cash 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 also be used to support the regulatory solvency requirement. However, the total regulatory capital requirement across the Group as at 30 June 2021 is £16.9 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 £1.4 million as at the period end (2020: £1.7 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 £4.0 million (2020: £4.4 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 2021 were £3.1 million (2020: £3.2 million). 
Dividend
I am pleased to announce that the Board has declared an interim dividend of 0.60 pence per share representing a 9% increase on last year (2020: 0.55 pence). The interim dividend is expected to be paid on 17 November 2021 to those shareholders on the register on 22 October 2021. The ordinary shares will become ex-dividend on 21 October 2021.
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 this half-year period being the first full 6 month contribution from the Berkeley Burke acquisition made in August 2020.   
Overall, the pensions revenue for the period was £8.7 million (2020: £7.9 million) representing 76% (2020: 67%) of total Group revenues. Total revenue is split between £4.9 million for QROPS (2020: £5.1 million), £1.7 million (2020: £1.9 million) for the SIPP and SSAS businesses and a further £1.5 million (2020: £1.0 million) for the workplace pensions business. In addition, this year the Group also has a revenue contribution of £0.6 million from third party administration and Group Pension Plans. 
The recurring revenue percentage for this operating segment remains at 93% in line with that of the same period for 2020. This combined with the relatively low attrition rates means that it remains a solid predictor of future divisional profitability.
The new business applications for QROPS and SIPPs have seen a decrease from the same period last year at 372 (2020: 473).  
 
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 started the year with a higher number of members than budgeted, the number of new members in the first six months has been lower than expected at circa 30,000. However, July and August have seen some of the transfers expected in the first half of the year with a total of circa 17,500 in these two months alone. Management is therefore confident that this revenue stream will deliver as expected.  
Life assurance 
Revenue for the combined life assurance businesses amounted to £1.6 million as compared to £1.9 million in 2020. This decrease is largely due to lower investment income and AUA based fees as a result of the lower interest rates and markets following the global pandemic as previously reported. 
In a similar manner to the pensions operating segment, our life assurance business also has high recurring fees. A total of 98% of total revenues for the period are recurring (2020: 95%). The reason for the increase in as a result of lower new business than the prior year, thus lower establishment fees. 
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, and continued effort to expand our intermediary base is an important part of improving our new business numbers. 
In addition, we have relaunched our short term annuity product during the second half of 2021, and we believe that this will deliver additional revenue and profit going into 2022.
Corporate and Trust Services ("CTS")
Revenue from the Corporate and Trustee Services divisions are included up to the date of disposal. In the case of the Gibraltar business this is for the period from 1 January to 23 March 2021 contributing £0.3 million of revenue (2020: £0.8 million). The Jersey business contributed £0.4 million in the period from 1 January to 8 May 2021 (2020: £0.8 million). 
 
Outlook 
The Board has built an infrastructure that will allow for scalability and accelerated organic growth going forward, and the focus of the management team must be to deliver on that proposition. Investment in the revenue generating part of the business is a commitment of the Plc board. As part of this drive, the newly created role of Group Director of Business Development Strategy will initially be taken by Christine Hallett on a secondment basis. Christine, who was previously managing director of our Options SIPP and Options Corporate businesses, has a proven track record in delivering organic growth. The non-board role will ensure that a stronger emphasis on new business and product initiatives are implemented across the Group, as well as capitalizing on cross selling opportunities.
In addition, the more streamlined Group post the disposal of the CTS businesses, and the stronger and deeper infrastructure that we have created has allowed the Plc board to revise its operating model. Part of this review has seen the decision to move down to a two person executive team at Plc board level. Pete Marr has agreed to step down as COO during the latter part of the year having made a significant contribution to the reshaping of the Group operating model, handing over his reporting lines to the two remaining executives. Nicole Coll, the incoming CFO from 1 October, will receive an orderly handover from Therese Neish during the last quarter of the year. 
There continues to be a strong appetite for further acquisitions as a key pillar for revenue and profit growth, to sit alongside the organic growth opportunities. 
We look forward to updating shareholders with our progress in the near future.
Alan Kentish
Chief Executive Officer
 
 
 
 
CONSOLIDATED INCOME STATEMENT 
For the period from 1 January 2021 to 30 June 2021
 




 


 


Notes


Unaudited
6 months to
30 June
2021
£'000


Unaudited
6 months to
30 June
2020
£'000


Audited
Year to
31 December
2020
£'000




 


Revenue 


4


11,386


11,810


23,982




 


Administrative expenses


 


(9,869)


(10,002)


(20,412)




 


Profit before other items


 


1,517


1,808


3,570




 


OTHER ITEMS
Bargain purchase gain


 


 
 
120


-


-




 


Gains on revaluation of financial instruments


 


222


-


59




 


Finance costs


 


(152)


(126)


(246)




 


Depreciation and amortisation


 


(760)


(669)


(1,363)




 


Profit before taxation


 


947


1,013


2,020




 


Taxation


 


(187)


(224)


(413)




 


 Profit after taxation 


 


760


789


1,607




OTHER COMPREHENSIVE INCOME
Items that are or may be reclassified to profit and loss
Foreign currency translation differences for foreign operations


 


(37)


16


(1)




Total other comprehensive income/(loss)


 


(37)


16


(1)




 


Total comprehensive income for the period/year


 


723


805


1,606




 


Profit attributable to:
Owners of the Company


 


800


861


1,777




 


Non-Controlling interests


 


(40)


(72)


(170)




 


 


 


760


789


1,607




 


Total comprehensive income 
attributable to:
Owners of the Company


 


763


877


1,776




 


Non-Controlling interests


 


(40)


(72)


(170)




 


 


 


723


805


1,606




 


Earnings per share basic (pence)


5


1.28


1.33


2.70




 


Earnings per share diluted (pence)


5


1.28


1.33


2.70




 
The results for the period from 1 January 2021 to 30 June 2021 include both continuing and discontinued activities. The results for the period from 1 January 2020 to 31 December 2020 relate to continuing activities (see Note 6).
 
 
 
 
 
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
 
 




 


Notes


Unaudited
30 June
2021
£'000


Unaudited
30 June
2020
£'000


Audited
31 December
2020
£'000




ASSETS


 


 


 


 




Non-current assets


 


 


 


 




Property, plant and equipment 


 


1,692


2,596


1,970




Intangible assets


 


20,066


20,634


19,912




Financial assets


 


697


416


475




Deferred tax asset


 


85


84


75




Total non-current assets


 


22,540


23,730


22,432




 


 


 


 


 




Current assets


 


 


 


 




Accrued income 


 


1,447


1,692


1,319




Trade and other receivables


9


7,619


5,062


9,073




Cash and cash equivalents


8


18,574


18,279


16,409




Assets held for sale


 


-


-


5,988




Total current assets


 


27,640


25,033


32,779




Total assets


 


50,180


48,763


55,211




 


 


 


 


 




EQUITY


 


 


 


 




Called up share capital


12


59


59


59




Share premium account


 


22,372


22,372


22,372




Retained earnings


 


13,836


12,951


13,541




Other Reserves


 


(482)


(430)


(447)




Equity attributable to owners of the Company


 


35,785


34,952


35,525




Non-controlling interests


 


(485)


(347)


(445)




Total equity


 


35,300


34,605


35,080




 
LIABILITIES


 


 


 


 




Current liabilities


 


 


 


 




Liabilities for current tax


 


890


1,216


1,197




Trade and other payables


10


11,681


10,944


14,974




Liabilities directly associated with assets held for sale


 


-


-


1,154




Total current liabilities


 


12,571


12,160


17,325




Non-current liabilities


 


 


 


 




Other payables


11


2,309


1,998


2,806




Total non-current liabilities


 


2,309


1,998


2,806




Total liabilities and equity


 


50,180


48,763


55,211




 
 
 
 
 
CONSOLIDATED CASH FLOW STATEMENT
For the period from 1 January 2021 to 30 June 2021
 
 




 


Notes


Unaudited
30 June
2021
£'000


Unaudited
30 June
2020
£'000


Audited
31 December
2020
£'000




Operating Activities


 


 


 


 




Profit for the period/year before tax


 


947


1,013


2,020




Adjustments for:


 


 


 


 




Depreciation of property, plant and equipment


 


369


398


793




Amortisation of intangible assets


 


391


271


570




Write-off of intangible assets


 


-


-


-




Loss on sale of fixed asset


 


-


-


-




Taxation paid


 


(447)


(100)


(299)




Bargain purchase gain


 


-


-


-




Unrealised gains on financial instruments at FVTPL


 


(222)


-


(59)




Share based payments


 


-


-


-




(Increase)/decrease in trade and other receivables


 


(996)


703


(215)




Decrease/(increase) in accrued income


 


291


(506)


(485)




Increase/(decrease) in trade and other payables


 


817


(96)


(12)




Net cash from operating activities


 


1,150


1,683


2,313




 
Investing activities 


 


 


 


 




Disposal of investments


 


2,369


-


-




Cash disposed of as part of investment disposal                 
Purchase of property, plant and equipment


 


(39) 
(193)


(40)


(70)




Increase in intangible assets


 


(546)


(417)


(875)




Consideration paid on acquisition of subsidiary


 


-


-


(1,447)




Cash acquired on acquisition of Subsidiary


 


-


-


27




Reclassification to assets held for sale


 


-


-


(725)




Net cash used in investing activities 


 


1,591


(457)


(3,090)




Cash flows from financing activities


 


 


 


 




Proceeds from Bank loans


 


500


-


1,600




Bank loan repayment


 


(138)


(500)


(1,200)




Lease liabilities paid


 


(437)


(444)


(843)




Treasury shares purchased


 


-


-


-




Dividends paid


7


(505)


(446)


(772)




Net cash from financing activities 


 


(580)


(1,390)


(1,215)




Increase/(decrease) in cash and cash
equivalents 


 


2,161


(164)


(1,992)




Reconciliation of net cash flow to movement in net funds


 


 


 


 




Analysis of cash and cash equivalents during the period/year 


 


 


 


 




Increase/(decrease) in cash and cash equivalents 


 


2,161


(164)


(1,992)




Effect of movements in exchange rates on cash and cash equivalents


 


4


37


(5)




Balance at start of period/year 


 


16,409


18,406


18,406




Balance at end of period/year 


 


18,574


18,279


16,409




 
 
 
 
 
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
For the period from 1 January 2021 to 30 June 2021
 
 




 


Share
Capital
£000's


Share
Premium
£000's


Retained
Earnings
£000's


Treasury
Shares
£000's


Foreign Currency Translation
Reserve
£000's


Shares
Based
Payments
Reserve
£000's


Total
£000's


Non-Controlling Interests
£000's


Total Equity
£000's




Balance at 




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 year


-


-


1,777


-


-


-


1,777


(170)


1,607




Other comprehensive income




Foreign currency translation differences


-


-


-


-


(1)


-


(1)


-


(1)




Transactions with owners, recorded directly in equity




Dividend paid


-


-


(772)


-


-


-


(772)


-


(772)




Treasury shares purchased


-


-


-


-


-


-


-


-


-




Share based payments


-


-


-


-


-


-


-


-


-




Changes in ownership interest




31 December 2020 and 




1 January 2021


59


22,372


13,541


(549)


(60)


162


35,525


(445)


35,080




TOTAL COMPREHENSIVE INCOME FOR THE PERIOD




Profit for the year


-


-


800


-


-


-


800


(40)


760




Other comprehensive income




Foreign currency translation differences


-


-


-


-


(35)


-


(35)


-


(35)




Transactions with owners, recorded directly in equity




Dividend paid


-


-


(505)


-


-


-


(505)


-


(505)




Treasury shares purchased


-


-


-


-


-


-


-


-


-




Share based payments


-


-


-


-


-


-


-


-


-




Changes in ownership interest




At 30 June 2021


59


22,372


13,836


(549)


(95)


162


35,785


(485)


(35,300)






NOTES TO THE CONSOLIDATED RESULTS
For the period from 1 January 2021 to 30 June 2021
 
 
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 2021 to 30 June 2021 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 2020. No changes in accounting policies are expected to be reflected in the Group's consolidated financial statements for the year ended 31 December 2021. 
 
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
6m 2021
£'000


Unaudited
6m 2020
£'000


Audited
2020
£'000




Pensions


8,690


7,930


16,488




Life Assurance


1,638


1,945


3,709




Corporate Trustee Services 


774


1,613


3,167




Other Services 


284


322


618




 


11,386


11,810


23,982




 
 
Analysis of the Group's turnover information by geographical location is detailed below:
 




Geographical Segment


Unaudited
6m 2021
£'000


Unaudited
6m 2020
£'000


Audited
2020
£'000




Gibraltar


3,172


4,080


7,999




Malta


445


3,855


7,625




United Kingdom


3.670


2,828


6,379




Jersey


3,822


773


1,483




Other


277


274


496




 


11,386


11,810


23,982




 
 
5.  Earnings per Share
 
Earnings per share for the period from 1 January 2021 to 30 June 2021 is based on the profit after taxation of £760,000 divided by the weighted average number of £0.001 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 2021 and 30 June 2020 is as follows:




 


2021


2020




Weighted average number of shares


59,408,088


59,408,088




Share incentive plan


-


-




Diluted


59,408,088


59,408,088




 
 
6.  Discontinued operation
 
On 23 March 2021 the Group disposed of its Gibraltar company and trustee services ("CTS") and tax compliance businesses. On 8 May 2021 the Group disposed of its Jersey based CTS businesses. These businesses were previously classified as held-for-sale and are now discontinued operations. 
 
There results for the discontinued operation included in the six month period ended 30 June 2021 are shown below. There are no results for discontinued operations included in the six month ended 30 June 2020 and the year ended 31 December 2020:
 




 


£'000




Revenue


785




Expenditure


(720)




Results from operating activities


65




Income tax


_




Results from operating activities, net of tax


65




Gain on sale of discontinued operation


120




Profit from discontinued operation


185




 
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
30 June 
2021
£'000


Unaudited
30 June 
2020
£'000


Audited
31 December 
2020
£'000




 


 


 


 




0.85 pence (2020: 0.75 pence) per qualifying ordinary share


505


446


772




 


 


 


 




 
 
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 £18,574,000.
 
 
9.  Trade and other receivables




     


Unaudited
30 June 
2021
£'000
 


Unaudited
30 June 
2020
£'000
 


Audited
31 December 
2020
£'000




Trade receivables


3,077


3,236


3,450




Receivables due from insurers 


-


-


3,600




Prepayments


581


879


634




Other receivables


3,962


947


1,389




Total


7,620


5,062


9,073




 
 
10.        Trade and other payables




 


Unaudited
30 June
2021
£'000


Unaudited
30 June
2020
£'000


Audited
31 December
2020
£'000




 


 


 


 




Deferred income


4,014


4,369


3,647




Provision 


-


-


3,600




Trade payables


549


659


368




Bank loan


552


700


552




Lease liabilities 


651


788


783




Contingent consideration


700


-


700




Other creditors and accruals


5,215


4,428


5,324




 


11,681


10,944


14,974




 
In November 2020 the Company signed a credit facility with Royal Bank of Scotland (International) Ltd for £5.50 million. The facility has a 5-year term with capital repayments structure 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 £1.6 million of this facility had been drawn down with £1.3 million outstanding. Interest on the drawn funds is charged at 3.5% per annum over the Sterling Relevant Reference Rate, with the undrawn balance charged at an interest 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 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
30 June
2021
£'000


Unaudited
30 June
2020
£'000


Audited
31 December
2020
£'000




Lease liabilities 


831


1,508


1,070




Bank loan


773


-


1,048




Deferred tax liabilities 


535


279


522




Provisions for dilapidation costs 


170


211


166




 


2,309


1,998


2,806




 
 
12. Called up share capital




 


Unaudited
30 June 
2021
£'000


Unaudited
30 June 
2020
£'000


Audited
31 December
2020
£'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




 
 
 

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