In a trading update this morning (October 14), STM revealed that although the last quarter of the year typically provides “solid new business growth”, it expects to see significantly lower levels and will have to “take a more conservative stance” on its new business numbers for the remainder of 2020.
Alan Kentish, chief executive of STM Group said: "It is incredibly disappointing to have to reduce our anticipated new business numbers, particularly given all the hard work involved in bringing the Options business into the STM family.
“Covid-19 has certainly created a more difficult backdrop in which to do business, and whilst we have looked after our existing clients admirably, it is apparent that our new business expectations for 2020 will not be met.
“We believe that much of the new business shortfall is a timing issue and thus expect it to come through in 2021, supporting our confidence in expected material growth in profit before tax for 2021."
Despite its Options workplace pensions business currently achieving a 50 per cent revenue uplift year-on-year, it is now expected to fall short of its overall revenue target by £320,000, as a direct result of lower than expected new business for September and expected shortfalls in the remaining three months of the year.
Options is the new name of Carey Pensions, which was bought by STM in 2018.
STM has also scaled back its anticipated new business numbers for its flexible annuity product as conversion rates into applications remains “frustratingly slow”
The expected impact on new business revenue for the last quarter is £150,000, with this directly impacting 2020 profit before tax.
STM stated: “There remain a number of specific initiatives and opportunities that remain in play for 2020 and into 2021, which have the ability to claw back some of the 2020 new business shortfall, however there is not sufficient certainty on their delivery to include them within our new 2020 business expectations.”
The group said it will continue to actively pursue acquisitions and is still working to integrate the recently acquired Berkeley Burke businesses.
In August STM announced it had acquired 100 per cent of the share capital of Berkeley Burke (Financial Services) Ltd and Berkeley Burke Employee Benefit Consultants Ltd, which provide administration and consultancy services to Ssas and international businesses.
The two acquired businesses are independent of the Berkeley Burke Sipp business, which was sold to Hartley Pensions after it entered into administration in September last year.