INVESTOR RELATIONS

STM Group Plc (AIM: STM), the cross border financial services provider, is pleased to announce that on 12 September 2016 it entered into a conditional agreement (the "Agreement") with the majority shareholders of London & Colonial Holdings Limited ("London & Colonial" or "LCH") to acquire the entire issued share capital of LCH and its subsidiaries for a consideration (the "Consideration") of up to £5.385 million (the "Acquisition").

London & Colonial is a service led independent financial services group with its head office in Haywards Heath, UK, offering SIPP products in the United Kingdom; Qualifying Recognised Overseas Pension Schemes ("QROPs") in Gibraltar and with an insurance business based in Gibraltar. It has established a reputation as an innovative product provider in an increasingly sophisticated market, being the creator of the original "Open Annuity" and an early provider of a pure SIPP product into an evolving pensions market. LCH reported audited revenues in the twelve months to 30 September 2015 of £3.83 million, a loss before tax of £0.07 million and net assets of £4.8 million.

The Board of STM believes that the Acquisition is highly complementary to STM's existing business and strategy and will contribute to the growth of STM. Furthermore, the Board believes that STM will benefit from cost synergies and economies of scale of approximately £750,000 on an annualised basis. It will establish STM in the UK SIPP market, the successful realisation of an important strategic objective of the Company. At the same time, STM will be acquiring a small book of Gibraltar based QROPS, together with a high quality portfolio of Gibraltar-based life policies. This will give STM's life assurance operation a significant step forward in critical mass and economies of scale.

The Acquisition will be funded from existing financial resources and from a new short term bank credit facility of £3.3 million (charged at 4% over LIBOR). The Board of STM believes it will be earnings-enhancing in the next financial year to 31 December 2017, following completion of the Acquisition ("Completion"), which is currently estimated to take place around December 2016.

The Acquisition is subject, inter alia, to regulatory approval by the Gibraltar Financial Services Commission (GFSC), with the approval from the UK Financial Conduct Authority (FCA) having already been received, and remaining valid for a three month period with the option to apply for an extension if required. An application for change of control has been submitted to the GFSC and is in progress. The Agreement has been signed by the majority of holders of the issued shares of LCH. Completion is also conditional upon the delivery of 100% of the shares of LCH within three months of signing the Agreement, or such longer period as parties to the Agreement may agree, after which STM can opt to proceed to completion with a majority stake of their choosing, subject to the FCA approval remaining in force.

£4.135m of the Consideration will be paid on Completion with up to a further £1.25m payable in three stages over the 12 months following Completion, and subject to pre-agreed conditions. Completion of the Acquisition will be announced once all conditions have been met.

Highlights of the Acquisition

• The Company has agreed to acquire LCH for a consideration of up to £5.385 million, payable in cash
• STM will achieve its strategic objective of acquiring entry into the UK SIPP market which the Board believe will be scalable; thus being able to accommodate returning UK expatriates with a SIPP offering
• LCH's UK SIPP business has approximately 2,000 members and generates a turnover of approximately £1 million
• LCH's Gibraltar life assurance business has approximately 1,200 policyholders; and generates a net turnover of approximately £2 million
• LCH's Gibraltar QROPS business has approximately 300 QROPS under management, and is expected to be easily absorbed into the STM's own QROPS administration system
• The Board believes that LCH has a good quality management team that will remain in place following Completion of the Acquisition
• Potential for redeployment of surplus regulatory capital to fuel further growth
• Access to an LCH in-house technology platform expected to be deployed across the Group in the first quarter of 2017 designed to be i) compatible for both our life assurance business as well as our QROPS and SIPP business and ii) structured to lead to significant efficiencies and cost reductions.

Commenting on the Acquisition Alan Kentish, Chief Executive Officer of STM, said:

"We are delighted to announce the acquisition of London & Colonial Holdings and its subsidiaries which will result in a considerably strengthened and enlarged Group. The transaction is a win-win outcome for STM and L&C.

"London & Colonial is a very well respected name within the industry where there are a number of current opportunities that can be accelerated with STM's resources and critical mass in the QROPs market.

"Not only does the Acquisition get STM a foothold into the UK SIPP market, it also brings with it a number of bolt-on consolidations in the QROPs and Life Assurance business. These will bring STM further economies of scale and will potentially free up regulatory capital in the medium term to fuel further growth."

Robin Ellison, Chairman of London & Colonial Holdings, added:

"We have over the years grown LCH in a forward thinking and innovative manner, and are delighted that STM share our vision of the future. We recognise that STM's enviable distribution network will allow LCH's businesses to flourish more quickly than could be achieved by LCH's existing management and network."

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

For further information, please contact:

Notes to editors:

STM is a multi-jurisdictional financial services group listed on the Alternative Investment Market of the London Stock Exchange. The Group specialises in the delivery of a wide range of financial service products to professional intermediaries and in the administration of assets for international clients in relation to retirement, estate and succession planning, and wealth structuring.

Today, STM has trading operations in Gibraltar, Malta, Jersey, and Spain. It has also recently opened satellite offices in South East Asia, the Middle East, and South Africa. The Group continues to expand through the development of additional products and services that its ever-more sophisticated clients demand.

STM has, for example, a dedicated international pensions division which specialises in Qualifying Recognised Overseas Pension Schemes (QROPS) and Qualifying Non-UK Pension Schemes (QNUPS); it also has a Gibraltar Life Insurance Company, STM Life Assurance PCC PLC, which provides life insurance bonds - wrappers in which a variety of investments, including investment funds, can be held.

Further information on STM Group can be found at www.stmgroupplc.com