STM Group Plc (AIM: STM), the cross border financial services provider, is pleased to announce a trading update for the 12 months to 31 December 2018, the appointment of a Chief Operating Officer to the Board and notice of its final results announcement.
The Group expects to deliver revenue of £21.3 million (2017: £21.5 million) and profit before tax of £3.9 million for 2018 (2017: £4.0 million), which includes an expected £0.5 million technical reserve release from London & Colonial Assurance plc (2017: £1.3 million). This represents underlying* revenue of £20.5 million (2017: £20.2 million) and underlying* profit before tax of £3.7 million (2017: £3.2 million) demonstrating year on year growth in these key metrics of the underlying business. The consistent theme to our business model remains the solid recurring revenue stream across the Group which accounts for 77% of total revenue (2017: 75%).
Additionally, the Board is delighted to announce that Peter Marr has been appointed as Chief Operating Officer of STM and has joined the Board of Directors with immediate effect. Peter formally worked as COO of Police Mutual, one of the UK‘s largest affinity mutual societies providing insurance, mortgages and savings products to its members, overseeing a staff in excess of 600 people. Prior to that Peter was Operations Director at Capita Insurance Services. He has a track record of delivering improvements and efficiencies to organisations that he has previously worked in.
The appointment of the COO is the final major appointment for the Group in enhancing its governance and risk management framework. Part of this process was commenced in early 2017 with the appointment of a Head of Enterprise Risk Management and was enhanced further in 2018 with the appointment of a Group Internal Auditor. As well as the COO appointment, the Group has also recently appointed a full-time Group Counsel and Company Secretary, to take over from Elizabeth Plummer who will retire later on in the year. These appointments, together with key appointments to the Board over the past 12 months who each bring with them significant depth of experience, will add to the robustness of the business.
Some of the costs of strengthening the Group’s governance framework have been incurred in 2018, however, this overall investment in infrastructure will result in an increase to our 2018 cost base which will flow through into 2019 and be reflected in future expectations.
The high proportion of recurring revenue in our business model together with the enhanced management structure provides the platform for the Group to deliver a stronger business and will form the basis for an accelerated growth strategy for the coming three years. This includes the roll out of more UK orientated products as well as a migration of all our pension products onto one administration system which, over time, will allow for more efficiency gains and an enhanced customer experience.
With the anticipated FCA approval for the Carey acquisition, announced in October 2018, the integration of this business with our existing UK SIPP business will allow for an expanded product range and a stronger UK distribution structure. The acquisition also allows STM to enter the workplace pensions market, a sector that is undergoing significant change and which will invariably see major consolidation of the smaller master trusts, where we certainly expect to be a player in this consolidation.
* stated net of insurance technical releases and one-off revenue and costs
Alan Kentish, CEO of STM Group commented:
“Whilst 2018 started off as a challenging year for STM, there is no doubt that our management team responded admirably and as a result of the Deloitte review we move into 2019 as a stronger and more robust business.
“Notwithstanding the challenges, we are pleased to have delivered a year of growth and been active in making two strategically significant acquisitions.
“I am delighted that Peter Marr has joined the team, and he will no doubt be a valuable asset in helping the executives to deliver increased value and confidence to our shareholders and our wider stakeholders. 2019 will be a year of consolidation and investment, but with a new enlarged and experienced Plc board, we will have all the building blocks in place for our ambitious short term growth and acquisition strategy.”
Notice of Results:
STM expects to announce its final results for the 12 months to 31 December 2018 on Tuesday 26 March 2019.