INVESTOR RELATIONS

STM, the cross border financial services group is pleased to announce the conclusion of the third party review (the "Report") being carried out by Deloitte LLP for certain STM Gibraltar regulated businesses (the "Companies") and the Gibraltar Financial Services Commission ("GFSC") under Section 7 of the Financial Services (Information Gathering and Co-operation) Act 2013 pursuant to the update provided on 1 June 2018.

As previously announced the agreed scope covered, inter alia, the effectiveness and oversight of the Companies' internal compliance function which is a central service for all the Gibraltar subsidiaries, corporate governance and controls, and an assessment of any potential conflicts of interest arising across the business. In addition, the review also covered certain specific areas in relation to the pensions and life assurance business relating to take-on and monitoring procedures for intermediaries, clients and investments advised by intermediaries.

The Report identified 32 findings across the Companies. This includes seven highlighted as priority where improvements are required to ensure that the businesses comply with the relevant Gibraltarian legislation and best practice and twenty one other findings with recommendations that will help improve the governance and compliance framework of the business. The Report noted that a significant part of the legislation which applies is principle based.

The Report puts forward a number of recommendations in relation to governance, including a more embedded risk framework with better defined risk appetite statements and additional non-executive directors for the relevant subsidiary boards. Specifically in relation to the life assurance company the Financial Services (Insurance Companies) (Solvency II Directive) Act 2015 has required since 1 January 2016 an internal audit function, which we are pleased to say has now been put in place.

The Report stated that the Companies should strengthen their Gibraltar Compliance Plan. A plan has already been submitted to the GFSC, with more detail as to how monitoring and oversight will be carried out in future, including a rolling review of intermediaries and clients. The Report provides a number of recommendations in this respect including segregation for first line and second line of defense. The Report also identified that there should be a more robust framework in place for identifying and recording how potential conflicts of interest across the businesses should be dealt with.

The Report acknowledges that some recommendations have already been implemented outside of the review period. The appointment of a Group Head of Enterprise Risk Management in March 2017, following a decision to recruit in mid-2016, has already strengthened the overall governance and compliance framework of the overall Group and thus benefitting underlying subsidiaries.

STM welcomes the recommendations put forward in the Report by Deloitte (the "Recommendations"), and the Companies now expect to engage with the GFSC in order to discuss the Recommendations and agree a plan of action to implement them. The Recommendations will make the Group's businesses more robust and the Board believes their implementation will ensure that the Companies continue the improvement of the processes and systems that they use to conduct their activities in line with the requirements of the GFSC.

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Notes to editors:

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

Today, STM has operations in the UK, Gibraltar, Malta, Jersey and Spain. The Group is looking to expand through the development of additional products and services that its ever more sophisticated clients demand. STM has developed a specialist international pensions division which specialises in Qualifying Recognised Overseas Pension Schemes (QROPS), Qualifying Non UK Pension Schemes (QNUPS). STM also has two Gibraltar Life Assurance Companies which provide 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