STM Group Plc (LON:STM), the cross-border financial services provider, has today announced the unconditional sale of its Jersey based trust and company services businesses for a minimum net cash consideration of £1.40 million.
The sale completes the Company’s strategy to exit the CTS sector, and focus on its core activities of pension administration and life assurance. The sale proceeds will further contribute towards funding organic growth opportunities and build on the cash resources available for further M&A activity.
The Sale Companies are principally STM Fiduciaire Limited, along with a number of non-revenue generating support companies, including nominee companies. Together these companies generated revenue of £1.48 million during 2020 and made a profit before tax contribution of £0.10 million to STM Group’s 2020 profits. STM Jersey was very much a stand-alone business, and thus there are minimal shared group costs that will need to be absorbed within the remaining Group.
The sale has two staged consideration payments totalling £1.86 million, with the amount payable upon completion being £1.26 million, with the final payment of £0.60 million being paid six months after completion. Cash of £0.46 million will be left within the Sale Companies representing the Jersey capital requirement, thus giving a net minimum cash consideration for the Sale Companies of £1.40 million. In addition, the sale agreement allows for a further consideration payment of 50% of any revenue surplus above £1.15 million of revenue that is categorised as recurring revenue. This calculation will be based on the twelve months trading from date of completion.
In addition to the consideration receivable from the buyer, certain net assets relating to debtors and work-in-progress are ringfenced by the Sale Companies for the benefit of STM, and these will be paid as these assets are converted to cash at bank. It is anticipated that this will amount to £0.42 million and will be principally received in the first six months post completion.
The Sale Companies have been sold to the privately-owned Imperium Group which has its head office in Guernsey. The purchase of the Sale Companies, complete with its staff and office resources, is a clear statement of its intentions to have a solid business platform in Jersey as well. Following regulatory approval from the Jersey Financial Services Commission, the signing of the sale and purchase agreement and subsequent completion occurred on Saturday 8 May 2021.
Alan Kentish, CEO of STM Group Plc, commented:
“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. 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.
“For STM, exiting the Jersey trust and company businesses is an important deliverable to allow the executive to focus on our core activities of pension administration and provision of life assurance wrappers. The additional cash resources will allow for further investment in our organic growth initiatives, as well as further potential M&A activity.”