STM sells Jersey-based trust services business

Cross-border financial services provider STM Group announced the unconditional sale of its Jersey-based trust and company services businesses for a minimum of £1.4m cash.

The AIM-traded firm said the sale completed its strategy to exit the corporate and trust service sector, and focus on its core activities of pension administration and life assurance.

It said the sale proceeds would further contribute towards funding organic growth opportunities, and build on the cash resources available for further merger and acquisition activity.

The sale companies were STM Fiduciaire, along with a number of non-revenue generating support companies, including nominee companies.

Together, the board said the companies generated revenue of £1.48m in 2020, and made a profit before tax contribution of £0.1m to the group's 2020 profits.

STM Jersey was a standalone business, and as such the board said there were “minimal” shared group costs that would need to be absorbed within the remaining group.

The sale had two staged consideration payments totalling £1.86m, with the amount payable on completion being £1.26m, and a final payment of £0.6m being paid six months after completion.

Cash of £0.46m would be left within the sale companies representing the Jersey capital requirement, thus giving a net minimum cash consideration for the sale companies of £1.4m.

In addition, the sale agreement allowed for a further consideration payment of 50% of any revenue surplus above £1.15m of revenue that was categorised as recurring revenue.

That calculation would be based on the 12 months of trading from the date of completion.

In addition to the consideration receivable from the buyer, certain net assets relating to debtors and work-in-progress were ring fenced by the sale companies for the benefit of STM, and they would be paid as those assets were converted to cash at bank.

It was expected to amount to £0.42m, and would be primarily received in the first six months post-completion.

The sale companies were sold to the privately-owned Imperium Group, which has its head office in Guernsey.

Following regulatory approval from the Jersey Financial Services Commission, the signing of the sale and purchase agreement and subsequent completion was effected on 8 May.

“We are delighted that the Jersey businesses and our colleagues that work within them, as well as our clients, have gone to a good home at Imperium,” said chief executive officer Alan Kentish.

“Imperium have confirmed that there will be minimal changes, whilst at the same time bringing new business opportunities, and I am confident that this will ensure a smooth and seamless transition to new ownership.”

Kentish said that for STM, exiting the Jersey trust and company businesses was an “important deliverable” to allow the executive to focus on the firm’s core activities of pension administration and the provision of life assurance wrappers.

“The additional cash resources will allow for further investment in our organic growth initiatives, as well as further potential merger and acquisition activity.”

At 1346 BST, shares in STM Group were down 0.03% at 30.99p.