STM results boost share price

Shares in AIM-listed STM Group (LON:STM) jumped 23.33% to 27.75p (as of 13:55 BST) following the publication of its results for 2019. Revenues for the year were up 8.4% relative to the prior period, but pre-tax profits took a slight dip as margins declined.

CEO Alan Kentish commented: “2019 has been a year of transition for the Group as we move towards a more efficient and unified business. This has meant that the 2019 numbers have included some additional investments in infrastructure under our revised Operating Model, and we saw a timing delay in the uptake of certain new business initiatives, however despite that, we delivered a statutory profit before tax of £3.9 million for the year.

“The completion of the Carey acquisition occurred in February 2019, with all operational integration now finalised giving us one solid UK hub for our SIPP and Workplace pension solutions businesses from which to further expand. This expansion will be driven organically through the relaunch of our UK products under the new brand of “Options, for your tomorrow”. This growth will be complemented by selective acquisitions in the UK market.

“2020 has started with the unprecedented impact of the COVID-19 virus which has thrown the health, social and financial environments of the world into turmoil. It is likely the financial impact of this will have longer term implications on many industry sectors. The resilience of our business model will be tested, but we are confident that the nature of our annual recurring fees, which are predominantly based on a fixed quantum rather than a percentage of Assets Under Administration (‘AUA’), gives a high degree of visibility for the majority of our revenue for the foreseeable future. An assessment of our business has indicated that based on existing interest rates and current depressed financial markets only £0.4 million of our 2019 £18 million of recurring revenue is at risk with a similar consequential risk to profitability. As one would expect, our priority is to protect our colleagues and maintain our service levels to our customers; and in this regard the Board has implemented various business continuity plans to ensure that our colleagues can work productively from home. At this point in time we have not seen that these actions have added any material cost to the business“.