14th Oct 2020 11:32
(Alliance News) -Â STM Group PLC on Wednesday took a "more conservative stance" on its new business numbers for the remainder of 2020.
Shares in STM were down 18% at 28.20 pence in London on Wednesday.
The financial services company said Covid-19 has caused delays in securing new business as places defer significant financial decisions.
"Traditionally though, the last quarter of the year has seen solid new business growth for STM, and this was certainly the expectation for 2020, particularly for our workplace pensions solution, as well as our new flexible annuity product. However, we are now seeing that certain initiatives are not yet delivering the volumes of business that we had expected," said STM.
Thus, it is now "prudent" to take a "more conservative stance" on new business numbers for the remainder of the year.
Despite the Options workplace pensions solution business currently achieving a 50% revenue increase year-on-year, it is now expected to fall short of its overall revenue target by around GBP320,000 due to lower than expected new business for September and anticipated shortfalls in the remaining three months.
"In particular, delays and postponements of bulk transfers have meant our previous expectations for the last quarter were over-optimistic," noted STM.
As a result of scaling-back anticipated new business numbers for the remainder of 2020 and into 2021, STM expects a GBP150,000 hit to new business revenue in the last quarter of this year, with this "directly impacting" 2020 pretax profit.
"It is incredibly disappointing to have to reduce our anticipated new business numbers, particularly given all the hard work involved in bringing the Options business into the STM family. Covid-19 has certainly created a more difficult backdrop in which to do business, and whilst we have looked after our existing clients admirably, it is apparent that our new business expectations for 2020 will not be met," said Chief Executive Alan Kentish.
Kentish added: "We believe that much of the new business shortfall is a timing issue and thus expect it to come through in 2021, supporting our confidence in expected material growth in profit before tax for 2021."
By Lucy Heming;Â [email protected]
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