STM Group predictable recurring revenue remains cornerstone

STM Group Plc (LON:STM), the multi-jurisdictional financial services group, has announced its unaudited interim results for the six months ended 30 June 2022.

Financial Highlights:

 2022202220212021
 (reported)(underlying)**(reported)(underlying)**
Revenue£11.3m£11.3m£11.4m£10.6m
EBITDA*£1.4m£1.7m£1.5m£1.6m
Profit before taxation (“PBT”)£0.5m£0.8m£0.9m£0.7m
Profit before other items margin12%15%13%15%
Earnings per share0.62pN/A1.28pN/A
Cash at bank (net of borrowings)£17.0m £16.5m 
Interim dividend0.60p 0.60p 

* EBITDA is defined as revenue from continuing operations less operating expenses i.e. profit from continuing operations before taxation, net finance income costs, depreciation, amortization, and non operating items such as bargain purchase gains and gains on the sale of investments

** 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

Operating Highlights:

·             Predictable recurring revenue remains a cornerstone of the business

·             UK Corporate Pensions business revenues continue to grow despite “small pot” legislation having come into effect

·             Strategic partnerships continue to be developed in the UK, for example Options SIPP is partnering with IG Group to provide its pensions SIPP wrapper

·             The Mercer SIPP and SSAS acquisition recently completed, post period end, adds further scale to the UK offering, in line with the strategy, doubling the UK SIPP & SSAS business

·             Further development of operating model to drive increased revenue growth

·             Significant new business now being generated in H2 2022 from our niche annuity products

Commenting on the results and prospects, Alan Kentish, STM Group Chief Executive Officer, said:

“As previously reported, the first six months of the year have been slower than anticipated for new business, although both the pensions and insurance businesses show an uplift in revenues relative to the prior year comparable period.

“The completion of the SIPP and SASS portfolio acquisition from Mercer Ltd as well as the continued development of several strategic partnerships in the UK further augment the Group’s UK focus and provide scale for further growth. Equally, the Corporate pensions business continues to grow despite changes in legislation coming into effect.

“Cost management and operating efficiencies remain key areas of focus for the Plc board.

“Further to the recently announced Board changes, I take this opportunity to express my thanks to Duncan Crocker and Malcolm Berryman who recently stepped down from their roles as Chair and independent Non-Executive Director respectively.  I equally take this opportunity to welcome Nigel Birrell as he assumes the role of Group Chair and as independent Non-Executive Director, I look forward to working closely with him in the coming months.

“There remain a number of exciting opportunities which, albeit slower to come to fruition than we would have liked, makes us optimistic for the future despite the unsettled macro-economic outlook. In particular, our niche annuity products are now starting to produce significant new business.”

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