In STM’s financial statement, published Tuesday, chief executive Alan Kentish said: “In addition to our organic growth strategy, STM has previously stated its intention to enter the UK Sipp market, as part of its expansion and accommodation strategy for its Rops clients and intermediaries.”
With operations in Malta and Gibraltar, Spain, and Jersey; STM offers, among other products, recognised overseas pensions schemes (Rops) and qualifying non-UK pension schemes (Qnups).
Through the acquisition of London & Colonial, which offers self-invested pension products (Sipp) in the UK and Rops in Gibraltar, STM will enter the UK Sipp market.
London & Colonial
London & Colonial’s UK Sipp business has approximately 2,000 members and generates turnover of approximately £1m. The firm’s Gibraltar life assurance business has around 1,200 policyholders and generates net turnover of nearly £2m.
The Gibraltar Rops business consists of around 300 Rops and STM expects to be able to easily absorb them into its own Rops administration system.
The acquisition has already been approved by the UK’s Financial Conduct Authority (FCA) but is awaiting a green light from the Gibraltar Financial Services Commission (GFSC).
Sipps on the rise
Recent data from the Association of British Insurers (ABI) reported a 10-fold increase in savers using Sipps following the pension reforms introduced in April 2015.
STM Group is not the only company looking to take advantage of the growing interest in Sipps, with Australia-headquartered platform technology firm Praemium announcing plans to buy UK Sipp provider Wensley Mackay.
In contrast, some providers have suggested that Rops have become more difficult to sell since the introduction of the pension freedoms.
STM Group reported a revenue decrease of almost 5% to £7.9m during the six months ending 30 June 2016, compared with a year ago. Ebitda was down nearly 19% to £1.3m.
One of the drivers behind the decline was STM’s decision to temporarily suspend establishment fees on its Rops. The company advised that results had been impacted in the short term but the move prompted an increase in Rops applications.
The company reported a bumper July following the waiver, with new business applications at their highest level for 12 months.
Chairman Michael Riddell said: “Whilst this will impact on the first year fees, it is very much an investment in the future as it has resulted in an increase to the volume of new business received.”
STM Pensions’ revenue remained relatively static between 1H15 and 1H16 at £4.4m, accounting for 56% of group turnover. Malta reported income for the period of £3.3m, while Gibraltar achieved £1.2m, both unchanged from last year.
Corporate and Trustee Services (CTS) accounted for 27% of group revenue, down from 30% in 1H15. Revenue from the Jersey CTS business was down over 14% to £1.2m, with Gibraltar CTS revenue down to £1m from £1.1m a year ago.
STM Group has undertaken initiatives to reduce costs in CTS, the full impact of this has not yet been seen.
STM Life revenue for the six months ending 30 June 2016 was £0.7m, a decrease of 12.5% from £0.8m a year ago.
In addition to the company’s six month financial results, STM announced that Alan Kentish, who had been acting as interim chief executive since the departure of Colin Porter, has been appointed to the role on a permanent basis.
STM also created two new roles: head of pensions and head of distribution. The positions are to be respectively filled by David Easton, formerly managing director of STM Pensions in Gibraltar, and Iain Farr, previously head of marketing for STM.