9th Sep 2014 08:32
LONDON (Alliance News) - STM Group PLC, an AIM-listed financial services group, Tuesday said its first-half pretax profit almost doubled, as it reaped the benefits of honing in on the international independent financial adviser market.
While the group will not pay an interim dividend, it said it will review the dividend policy at the end of the year. Chief Executive Colin Porter said he expects cash generation in the second half of the year to increase, given the rise in group profitability and the reduction of borrowings.
In a statement, STM said it made a GBP1.0 million pretax profit in the six months ended June 30, compared with GBP546,000 in the corresponding period last year.
The group, which specialises in delivering financial service products to professional intermediaries and the administration of assets for international clients in relation to retirement, estate and succession planning and wealth structuring, said the increase in pretax profit came as revenue rose to GBP7.4 million from GBP6.6 million.
STM has been tailoring its products for the pensions and life assurance markets, primarily focusing on the international independent financial adviser market, rather than through accountancy and law firms for the corporate and trustee service provider (CTS) sector. It said this has resulted in "solid and steady" growth in its pensions division, with STM Life now gaining traction and contributing to group profit.
However, STM's pensions business is the group's largest contributor in terms of profit and revenue, now accounting for more than half of income after increasing to GBP3.8 million from GBP3.0 million. Most of that growth came in Gibraltar, STM said.
Although STM said the CTS sector remains challenging, it said it believes there are opportunities in emerging and less developed markets.
Administrative expenses rose to GBP6.1 million from GBP5.8 million.
CEO Porter said the group's increased focus on support the IFA markets has allowed STM to differentiate itself from the traditional corporate and trustee service provider industry.
"These results demonstrate the continued delivery of a new-look STM, with more focus on supporting the IFA markets with product initiatives in the expatriate pensions and life assurance arena that meet their specific needs," Porter said in a statement.
The CEO said the increase in profitability is expected to continue during the second half of the year and beyond, as STM's pensions business continues to grow and second year fees in this area fall due.
"In addition, STM Life has a healthy pipeline of expected new business which, together with continued efforts to increase our distribution networks and launch new products, should result in further growth in this area," Porter said.
STM shares were Tuesday quoted up 9.1% at 28.90 pence.
By Samuel Agini; [email protected]; @samuelagini
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