13th Aug 2020 17:14
(Alliance News) - STM Group PLC said it has purchased Berkeley Burke Financial Services Ltd and Berkeley Burke Employee Benefit Consultants Ltd from Berkeley Burke Group Ltd for up to GBP2.9 million.
The businesses provide administration and consultancy services to small self-administered pension schemes in the UK and to large and medium sized UK and international businesses, delivering pension solutions for their UK and overseas employees.
The London-based cross-border financial services provider said the GBP2.9 million consideration comprises an initial payment of GBP1.4 million and a further GBP1.5 million of contingent deferred consideration based on revenue hurdles that apply to existing business and opportunities in the pipeline. It said up to GBP1 million contingent consideration is payable at the first anniversary of the date of the acquisition and a maximum of GBP500,000 at the second anniversary.
STM said each business has annual recurring revenue of around GBP1 million. It added that the acquisition is anticipated to breakeven in the first twelve months and is expected to make an annual profit of around GBP600,000 thereafter. For the year to June 30, the combined businesses posted revenue of GBP1.9 million, pretax profit of GBP100,000 and net assets of GBP200,000.
The purchase will be funded out of existing cash resources and a new GBP5.5 million credit facility from Royal Bank of Scotland International Ltd.
"We are really pleased to get this acquisition under our belt. The businesses fit nicely within our existing operations and complement some of our imminent expansion plans in the international pension space. I am delighted to welcome Grahame Berkeley, who will act as a consultant to the business for the foreseeable future, and his dedicated staff to the STM family. In addition, finalization of the new bank facility will allow us to further continue to pursue our acquisition strategy for other opportunities," said STM Cheif Executive Alan Kentish.
The stock closed 10% higher at 33.10 pence each on Thursday in London.
By Ife Taiwo; [email protected]
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