Pensions  

STM expects profit drop due to new business delays

STM expects profit drop due to new business delays

STM expects its revenue to be lower this year due to delays with new businesses revenues materialising, but said a white-label Sipp platform is to go live before the end of the year.

The firm, which is the parent company of Options Pensions, formerly known as Carey Pensions, said in a trading update today (November 19) that the second half of the year has been a “frustrating” period for the group.

The board expects net revenue for the group to be £22.5m (2020: £24m), and a pre-tax profit of £1.5m (2020: £3.6m).

It said the anticipated new business revenues in its UK Sipp business and Gibraltar life businesses were slower to materialise than expected in the year to December 31, contributing £400,000 less than expected.

Furthermore, it added, there were still businesses under negotiation, such as the London & Colonial annuity product, that was expected to contribute to profitability.

However, the firm expects to go live with two white-labelled Sipp platforms before the end of the year.

The group’s Ebitda has also been impacted by a slower than anticipated reduction in its cost base following migrations onto new IT systems.

The firm said it has taken “significant steps” during the third quarter to move to a more “efficient target operating model” which will see the business return to better operating margins.

Meanwhile Christine Hallett, formerly managing director of STM’s UK business, was appointed director of group distribution on November 1. 

The firm said: “We anticipate profitable growth next year, targeting profit before tax of at least £2m, excluding any contribution from the London & Colonial annuity product referred to above, given the small volume of policies and uncertainty on timing.  

“Furthermore, the business continues to look for acquisition opportunities that would give more scale to its UK businesses.”

Last November STM secured a £5.5m war chest to fund acquisitions in the coming years. 

In its results published in May last year, the firm set aside £3.6m to deal with possible future claims following the recent outcome of the long-running Adams v Carey case.

In the Court of Appeal’s decision earlier this year (April 1) judges overturned a previous High Court ruling and sided with Adams, who had lost money after investing in high risk unregulated investment Store First via his Sipp.

But STM Group has since sought permission from the Supreme Court to appeal this decision.

sally.hickey@ft.com