10th Mar 2015 08:53
LONDON (Alliance News) - STM Group PLC saw its shares rise early Tuesday, after its 2014 operating earnings more than doubled on strong growth in pensions revenue driven by the investments it made in expanding its network in recent years.
Those investments had been driving revenue growth but meant profitability was lagging. That situation ended in 2014.
STM reported a pretax profit of GBP1.7 million for the year, up from GBP0.3 million in 2013, while its closely-watched earnings before interest, tax, depreciation and amortisation rose to GBP2.3 million, from GBP0.9 million. Revenue grew by 19% to GBP15.9 million, from GBP13.4 million in 2013, driven by 36% growth in pensions revenue.
"STM has previously been successful in driving revenue growth, however, this year I am pleased to say that we can also see significant increases in profitability. Consequently, this has had a positive impact on our cash balances which has allowed us to reduce our borrowings. Additionally, it has allowed the business to invest further in increasing our distribution network," Chairman Michael Riddell said in a statement.
Cash and cash equivalents were GBP5.7 million at the end of 2014, up from GBP4.0 million at the end of 2013, while it cut external borrowings by GBP1.0 million.
"The growth during the year across both divisions has resulted from selling specialist products and services through an enlarged distribution network, which is now generating business on a much more global basis. The group is now a more solid business with a much stronger balance sheet which will allow it to continue developing its business and product development activities during the forthcoming year," Riddell said.
Revenue in the pension division rose to GBP8.0 million, from GBP5.9 million in 2013, while its life insurance business also became a bigger contributor with revenue rising to GBP1.4 million, from GBP0.6 million in 2013. As a consequence, revenue from its corporate and trustee services business made up 35% of group revenue, down from 44% in 2013. Revenue from this business fell to GBP5.5 million, from GBP5.8 million.
STM Group shares were up 12.00% at 29.12 pence early Tuesday, making it one of the best-performing stocks in the AIM All-Share index.
By Steve McGrath; [email protected]; @stevemcgrath1
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