INVESTOR RELATIONS

Following today's UK Spring Budget, STM Group provides the following update with respect to its understanding of the announcement and the potential impact to the Group's business.

In his Spring Budget speech, the Chancellor indicated that there will be significant charges and tax implications for some individuals considering taking out a QROPS transfer from a UK pension scheme. Whilst the detail of the proposed bill is yet to be published, it would appear that those expatriate individuals living outside the European Economic Area ("EEA") would incur a 25% exit tax on their pension fund unless they are transferring to a QROPS in the country they are resident in.

This change is likely to have an impact on STM's ability to grow the number of QROPS policies it administers; however it is not anticipated that this tax change will impact the Group's existing QROPS business, which generated recurring revenue from annual management charges of approximately £8.4 million in 2016. Overall, the Group's pension business represented approximately 50% of total revenue in 2016 (approximately £9 million) with annual recurring revenues representing over 90% of this figure.

We currently anticipate that the proposed change in tax legislation will not impact all of our new QROPS new business generation. In particular, we believe that there should not be an impact on new QROPS applications business from EEA countries, which accounts for circa 20% of new QROPS business. The other 80% of new QROPS business is generated from outside of the EEA and could therefore be affected by this new charge.

Having spoken to intermediaries, they have advised that in certain cases, and for certain countries, their clients may still look to transfer their pension to a QROPS policy despite this charge. Intermediaries will be carrying out extensive research over the coming weeks to analyse the impact of the proposed new tax charge further.

Furthermore, they have advised that whilst a QROPS might not be such an attractive proposition for their clients, they would look to promote a UK SIPP alternative. We therefore hope that an increase in new applications for our UK SIPP business may mitigate some of the impact of the new tax legislation on our ability to win new QROPS policies.

Importantly we believe that our other revenue streams namely from our life assurance businesses, as well as our Corporate and trustee service provider business, will not be affected by the proposed changes to QROPS tax legislation. These divisions represent approximately 50% of STM's 2016 revenues.

The Group will provide further updates in due course once more clarity in relation to the detail of the budget is announced.

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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