28th Apr 2020 14:12
(Alliance News) - STM Group PLC on Tuesday reported lower profits for 2019 as it declared a lower annual dividend as part of its efforts to conserve cash amid Covid-19 uncertainty.
Shares in the financial services provider were trading 23% higher at 27.75 pence each on Tuesday afternoon in London.
STM posted pretax profit of GBP3.9 million, down 2.5% from GBP4.0 million in 2018. This was despite an 8.9% rise in revenue to GBP23.3 million from GBP21.4 million.
The decline in profit was attributed to exceptional costs of around GBP600,000 in relation to the company's application for authorisation to enter the UK workplace pension business and recruitment costs in building the enhanced infrastructure for this. STM also cited the write-off of some legacy issues surrounding the Corporate & Trustee Services division and Spanish division.
STM said its Pension businesses contributed GBP14.1 million to revenue, representing 61% of total group revenue. The Life Assurance companies contributed GBP4.8 million, while the Corporate & Trustee Services division contributed GBP3.7 million. The Spanish office, which provides tax compliance and conveyancing to the expatriate market, and the now discontinued insurance management business contributed GBP700,000.
Total annual dividend declared is 1.50p, down from 2.00p in 2018.
Looking ahead, the London-based company said it believes that only GBP400,000 of its GBP18 million recurring revenues are at risk amid the Covid-19 pandemic. It added that it will focus on developing the activities of its Life Assurance and Pensions business and will explore acquisition opportunities to support said development.
"I am conscious that Covid-19 pandemic continues to unfold and inflict enormous disruptions both at a personal, as well as economic level. The delay from intending to announce our results on March 24 until today, has allowed us to challenge and assess the resilience of our business model, and I am pleased to confirm that the majority of our recurring annual revenue is not sensitive to interest rates or assets under administration and thus remains predictable for the foreseeable future" said Chair Duncan Crocker.
As at the end of December, STM had cash of GBP18.4 million.
By Ife Taiwo; [email protected]
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