STM is quitting the British overseas territory at a time when the company is under investigation by the regulator and its chief executive is being investigated by the Money Laundering Unit on suspicion of failure to disclose.
In a trading update to the stock exchange on Wednesday, the AIM-listed company said the anticipated relocation is now in progress and has been well received by intermediaries, investors and other various stakeholders in its business, who “recognise the benefits of being based in the UK”.
The board decision, taken during 4Q17, was widely expected following the acquisition of London & Colonial a year earlier and the hit to its recognised overseas pension scheme (Rops) business in 2017 following the spring UK Budget.
In the update, STM also told investors that the company had been trading in line with market expectations, and expects to deliver a profit before tax for the year to 31 December 2017 of not less than £3.8m ($5.37m, €4.35m) compared to £2.8m in 2016.
“With the UK Budget instantly curtailing most of our new Rops business in March and the exceptional circumstances of the fourth quarter, 2017 has certainly brought its unexpected challenges,” Alan Kentish, chief executive of STM, said.
“Pleasingly, however, management was able to react proactively which allowed the business to perform in line with management expectations.
“The Group’s annual recurring revenue continues to underpin our business. However, 2017 has resulted in significant changes to our geographic footprint and business proposition – an up-sizing of our UK business and less reliance on our Gibraltar and Malta pension businesses.
“Such a repositioning of our business is time consuming and required some integration during 2017. This investment brings opportunities in 2018 to improve our profit margins,” he said.
Following confirmation of the move, shares in STM were up 8%.
A spokesman told International Adviser that STM did not anticipate a headcount reduction in Gibraltar with the exception of the executive officers who are moving to the UK.