STM profits down amid extended takeover talks

SIPP provider STM has reported half year, pre-tax profit down by £400,000 as negotiations over a takeover bid for the group are extended again. The company, which owns SIPP firms Options and London & Colonial Pensions, reported a pre-tax profit of £100,000 for the six months ended 30 June (2022: £500,000). The company has halted its dividend payments while the takeover negotiations continue. STM is currently subject to a takeover bid from Pension Superfund Capital which has been extended several times and has now been extended again until 11 October. There is no certainty the bid will result in a takeover of the business, STM said. Chief executive Alan Kentish is also trying to buy the UK SIPP businesses at the same time as the takeover bid is being thrashed out. Despite the fall in pre-tax profits, revenue was up 17% for the period from £11.3m to £13.2m.Revenue was boosted by sharing cash interest rate rises with clients. Income from new business was lower than expected, the firm said.During the period the company successfully integrated the Mercer SIPP and SSAS businesses it acquired in the second half of 2022 and completed the first part of a strategic review. Talking about the results, Mr Kentish said: “To say it has been a busy period would be an understatement, firstly with the strategic review and more recently in dealing with the possible offer by Pension SuperFund Capital for the entire issued and to be issued share capital of the Company, as first announced on 11 July 2023.“During the recent months, the management has been heavily focused on facilitating Pension SuperFund Capital's due diligence workstreams. Despite the exceptional circumstances, all colleagues and teams have worked hard to ensure continued delivery of service to customers and value to shareholders.“In this respect, and as previously announced, certain changes to the policy on interest income were put into effect on 1 July 2023. This allowed for better rate negotiations on client cash balances with banks, and changes were made to how this was shared with customers."Whilst the first half of the year has seen the benefits of increased market interest rates and the income that can be generated from funds held on behalf of clients, the second half of the financial year is particularly expected to see the significant benefits from the change in policy, as well as from the materially rising interest rate environment which the company has benefited from during 2023. This increased interest income compensated for income from new business generation across the group being slower than anticipated.“With recurring operating revenue continuing to hold up well when compared to the first half of 2022, the overall revenue for the period was 17% higher than the prior period."Mr Kentish said operational expenses for the period were £11.7 million (2022: £10.0 million), in line with management expectations, with overruns in certain expense categories, mainly legal and professional costs, being compensated for by savings in personnel costs.

STM profits down amid extended takeover talks

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