STM reports 44% profit drop

STM Group, parent company of SIPP provider Options, has reported a 44% drop in profit before tax for the six months ended 30 June.

STM owns a number of SIPP and SSAS businesses including Options, formerly known as Carey Pensions.

Revenue for the first half of the year remained steady at £11.3m (H1 2021: £11.4m).

Earnings per share also dropped to 62p (H1 2021: £1.28).

Alan Kentish, CEO of STM Group, said the first six months of the year were slower than expected for new business and that the company continues to focus on cost management.

He said: “As previously reported, the first six months of the year have been slower than anticipated for new business, although both the pensions and insurance businesses show an uplift in revenues relative to the prior year comparable period.

“The completion of the SIPP and SASS portfolio acquisition from Mercer Ltd as well as the continued development of several strategic partnerships in the UK further augment the Group’s UK focus and provide scale for further growth. Equally, the Corporate pensions business continues to grow despite changes in legislation coming into effect.

“Cost management and operating efficiencies remain key areas of focus for the Plc board.

“There remain a number of exciting opportunities which, albeit slower to come to fruition than we would have liked, makes us optimistic for the future despite the unsettled macro-economic outlook. In particular, our niche annuity products are now starting to produce significant new business.”

STM recently completed its acquisition of the SIPP and SSAS portfolio of US asset manager and pension consultancy Mercer. 

The deal adds 2,100 SIPPs and 700 SSAS to Option’s UK portfolio.

The international SIPP and financial services provider paid £3.34m for the portfolio, net assets and trustee companies of Mercer’s UK SIPP and SSAS business.

STM said the deal will provide a platform for scalability, particularly for its SSAS operations.

It added that the portfolio will also give Options access to an expanded network of intermediaries who have introduced clients to Mercer.

The portfolio generated £0.87m EBIT for the financial year ended December 2021 and is expected to contribute a similar annual amount to Options following a 12-month integration process.

Options will retain Mercer’s office premises in Cardiff as well as existing staff members.

The deal was funded from existing financial resources and a remaining available debt facility previously arranged with STM’s bank.

STM Group’s UK arm Options was formerly known as Carey Pensions.

The firm acquired Carey UK Pensions LLP in February 2019, and has been fighting a long-running landmark legal base which question provider responsibility when accepting investments into a SIPP.

The Supreme Court ended the long-running case in April when it denied STM permission to appeal following a ruling from the Court of Appeal last year which ruled in favour of the claimant who had lost money after making a high-risk, unregulated investment through his SIPP.  

The Supreme Court is the final court of appeal in the UK legal system, therefore the appeal denial is likely to end the long-running sage relating to an investment made in 2012.

The original case was heard in March 2018.