STM Group Plc (AIM: STM), the cross border financial services provider, announces a trading update for the 12 months to 31 December 2021 and the outlook for 2022.
The second half of the year to date has proved a frustrating period for the Group, with certain anticipated new business revenues in its UK SIPP business and Gibraltar life business being slower to materialise than anticipated, contributing approximately £0.4 million less to 2021 revenue and EBITDA expectations. Furthermore, there are a number of large pieces of business currently under negotiation, particularly around the London & Colonial annuity product, that would generate a material uplift in revenue and profitability for 2021. As uncertainty remains as to whether these policies will be incepted prior to year-end, the Board has taken the prudent view that these should not be reflected in revised forecasts.
The Group's EBITDA position has been further impacted by approximately £0.1 million by a slower than anticipated reduction in its cost base following the migrations onto new IT platforms for the UK and Gibraltar businesses; with an additional delay for the migration of the Malta business until mid-December 2021. Whilst the majority of the savings on software fees have come to fruition, the staff resource savings have yet to substantially materialise but are expected to do so moving into 2022.
As a consequence of the above, the Board now anticipates that the Group will report revenue of £22.5 million, EBITDA of £3.4 million and statutory profit before tax of £1.5 million for 2021.
As indicated in the interim trading update, STM has taken significant steps during the third quarter of 2021 to move to a more efficient target operating model which, in turn, will see the business return to better operating margins. In addition, Christine Hallett, formerly Managing Director of STM's UK businesses, was appointed as Director of Group Distribution as of 1 November 2021. Christine is building her new business development team with a focus on capitalising on the Group's existing business relationships, as well as those in the pipeline. In this regard, STM expects to go live with two platforms with a white-label SIPP product prior to the year end.
We therefore anticipate profitable growth next year, targeting profit before tax of at least £2 million, excluding any contribution from the London & Colonial annuity product referred to above, given the small volume of policies and uncertainty on timing. Furthermore, the business continues to look for acquisition opportunities that would give more scale to its UK businesses.
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.