Final Results for the 12 months ended 31st December 2023
STM Group plc (AIM: STM), the cross-border provider of retirement solutions, life assurance products and related administrative services, is pleased to announce its audited final results for the 12 months ended 31st December 2023.
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Financial Highlights:
| 2023 (reported) | 2023 (adjusted)** | 2022 (reported) | 2022 (adjusted)** | |
| Revenue | £28.1m | £28.1m | £24.1m | £24.6m |
| Profit before other items* | £3.2m | £5.8m | £3.3m | £4.7m |
| Profit before taxation | £0.4m | £3.1m | £1.6m | £2.8m |
| Operating margin before other items | 11% | 21% | 14% | 19% |
| Earnings per share^ | 0.70p | 5.12p | 1.42p | 3.44p |
| Cash at bank (net of borrowings) | £13.6m | £13.6m | £13.9m | £13.9m |
* Profit before other items is defined as revenue less operating expenses i.e. profit before taxation, finance income and costs, bargain purchase gain, goodwill impairment and gain on the call options
** Adjusted statistics are net of certain transactions which do not form part of the regular operations of the business as further detailed in Table 2 below
- Group’s revenue and profit before tax in line with the Board’s expectations;
- Reported revenue up 17 % as a result of the interest sharing policy and full year contribution of Mercer portfolio acquisition.
- High percentage of annual recurring revenue – amounting to 81% of total revenues - provides a base for the Group’s ongoing profitability;
- Adjusted profit before other items increased by 24% to £5.8m (2022: £4.7m);
- Adjusted profit before taxation increased by 10% to £3.1m (2022: £2.8m); and
- Profit before taxation decreased by 72% to £0.4m (2022: £1.6m) due to £1.2m professional costs incurred and expensed in relation to the proposed acquisition by Jambo;
- No dividends declared for 2023 in line with the terms announced for the proposed acquisition of STM by Jambo SRC Limited (see below) (2022: 1.2 pence per ordinary share).
Operational Highlights:
- Agreement reached between STM Independent Directors and the board of Jambo SRC Limited (“Jambo”), regarding the terms of the acquisition (“Acquisition”) of the entire issued and to be issued ordinary shares of STM by way of a Scheme of Arrangement (the “Scheme”).
- Scheme approved on 6th December 2023 by 99.9% of independent Scheme Shares voted and by 89.5% of independent Scheme Shareholders who voted;
- Shareholders entitled to receive 60 pence per ordinary share in cash at completion of the Acquisition as well as a Deferred Consideration Unit which may deliver up to 7 pence per ordinary share in cash; and
- Acquisition subject to change of control approvals by Gibraltar and Malta; regulatory assessment processes continue in both jurisdictions but approvals yet to be received.
- Acquisition also conditional on STM board selling the UK SIPP Companies by way of an MBO to Pathlines Holdings Limited (a company in which STM CEO, Alan Kentish, and his family hold a significant minority interest) for a total cash consideration of £4.5 million; and
- Integration of Mercer SIPP & SSAS portfolios acquired in September 2022 was completed during the year – businesses performed in line with expectations.
Post Period Highlights:
- After careful consideration of its options for its Options Workplace Pensions Master Trust (“Options Master Trust”), STM signed a commercial contract with Smart Pension Limited (“Smart”) on 14th June 2024;
- Subject to approval by the trustees of the Options Master Trust, Smart will become default provider, and members of the Options Master Trust will transfer over time to Smart’s own Master Trust. STM will receive an estimated £4.7 million consideration for such transfers over the next two years;
- An introducer agreement was also signed with Smart offering STM introductory commission to new business relationships introduced to Smart. Additional introducer income from this agreement is estimated at between £1 million and £5 million over the next three years; and
- Since 31st December 2023 the Group has continued to trade in line with the Board’s expectations.
CHAIRMAN’S STATEMENT
I am pleased to present to you the STM Group PLC (“STM”) results for the year ended 31st December 2023 - the first full year that the newly constituted Board has been in situ.
Given the embedded value within the Group’s businesses and the backdrop of predictable recurring revenue and ongoing profitability, my role as Chair and that of my fellow directors has been to set a strategic course which would deliver enhanced shareholder value. This could come about by the introduction of new products and the achievement of greater efficiencies or by the orderly break-up or sale of the Group.
As announced in January 2023, the Board commissioned an independent strategic review from a third-party consultancy company to assess the Group’s operating businesses, identify those with the most potential for future profitability and recommend alternative strategies for those and the remaining businesses within the Group. The results of the review were presented to the Board in March 2023 and concluded that the success of the Group would ultimately be dependent on its technology capabilities. The review did highlight that the anticipated externally realisable value of the various businesses within the Group was significantly more that the market capitalisation of the Group at the time. As a result of the strategic review, the Board initiated a technology review as the final input required for the Board to determine the strategy going forward.
However, as well documented in the various market announcements from July 2023 onwards, the Group received an initial approach and expression of interest in the Group, which culminated in the announcement of an offer for the whole of the issued and to be issued share capital of the Company, issued in accordance with Rule 2.7 of the Takeover Code, on 10th October 2023. The offer was to be effected via a Scheme of Arrangement, and the Scheme document was issued to shareholders on 9th November 2023.
Full details of the offer are set out in the CEO’s Review within the Annual Report, but in summary the offeror, Jambo SRC Limited (“Jambo’), would acquire the whole STM Group, with the exception of the two SIPP businesses which would exit by way of a management buyout to be completed immediately prior to the overall transaction. The acquisition, once completed, will deliver an up-front 60 pence per share in cash to STM shareholders, with up to a further 7 pence per share in deferred contingent consideration at the one-year anniversary, dependant on certain criteria.
The Scheme was approved by 99.99% of all independent Scheme Shares voted and by 89.5% of independent Scheme Shareholders who voted on 6th December 2023. The transaction remains subject to regulatory approval of the proposed change in control of the Group by the Gibraltar and Malta regulators.
Given the anticipated acquisition by Jambo, and the fact that any dividend declared would be deducted from the final consideration under the terms of the Scheme, the Board has taken the decision not to declare a final dividend for 2023 (2022: 0.60 pence).
Turning to the performance of the business, I am pleased to confirm that the reported 2023 revenue and underlying profit before tax were in line with management’s expectations, although reported profitability was significantly reduced as a result of expensing £1.2 million of non-recurring professional advisory costs relating to the potential acquisition by Jambo.
The Group’s recurring revenue continues to provide a predictable base for the Group’s ongoing profitability, and this has been bolstered by the additional revenue generated from the new interest sharing policy that was implemented for the UK SIPP businesses in July 2023. Similar policies are in the process of being rolled out for the other areas of the business.
I noted in my previous Chairman’s statement that STM was at a cross-roads in its evolution, and that certain parts of the business would be difficult to grow or to achieve a full valuation. In this regard, I am delighted to confirm that, on 14th June 2024, the Group announced it had signed a commercial agreement with Smart Pension Limited (“Smart”), and related agreements under which, subject to trustee approval, the members in the Group’s Options master trust will transfer to Smart’s master trust. This is likely to generate a consideration of £4.7m payable over the next couple of years. In addition, the Group has also signed an introducers agreement with Smart, which will allow for the Group to receive introductory fees for new business introduced by STM to Smart.
Importantly, the agreement allows STM to exit the UK workplace pension market, which is becoming more competitive and starting to be dominated by the larger players. The transaction was undertaken with Jambo’s consent.
Finally, my thanks go to all of my STM colleagues for their hard work and commitment during the course of 2023 and into 2024.
I would like to extend my particular thanks to Therese Neish, who left the Group on 31st May 2024, for her considerable contribution and dedication to the Group over many years.
I look forward to updating the market in due course in relation to the change of control approvals from the Malta and Gibraltar regulators which, once received, will allow the acquisition by Jambo to conclude and the initial consideration of 60 pence per ordinary share to be paid to shareholders.
Nigel Birrell
Chairman
CHIEF EXECUTIVE OFFICER’S REVIEW
Introduction
The 2023 financial year has been dominated by strategic projects, with the focus in the second half of the year being on the initial approach and expression of interest by Jambo SRC Limited (“Jambo”) in June 2023, which culminated in an offer by Jambo for the whole of the issued and to be issued share capital of the Company on 10th October 2023, subject to regulatory approval of the change of control in Gibraltar and Malta. The offer was also conditional on the UK SIPP businesses completing a management buy-out immediately prior to the Court approval of the Scheme of Arrangement (the “Scheme”) by which the acquisition was to be effected, subject to change of control approval in the UK.
The Scheme was approved at an EGM held on 6th December 2023 with 99.9% of Scheme shares voting to accept the Scheme offer. As at the date of these financial statements, the FCA in the UK has approved the prospective change of control of the companies subject to the management buyout, but the approval processes in Gibraltar and Malta have yet to be concluded.
2023 commenced with the appointment of third-party consultants to undertake a strategic review of the Group’s operation, the results of which were reported to the Board in late March 2023. Further details of the results of the review and the impact of the approach and subsequent offer by Jambo on the Board’s conclusions and further actions are set out in the Chairman’s Statement.
Notwithstanding the significant distractions arising from the approach by Jambo, the Group has continued to trade in line with management expectations.
The continuing high percentage of annual recurring revenue for 2023, amounting to 81% of total revenues, underpinned the day-to-day performance of the various trading divisions, and for the latter part of 2023 this was supplemented by the new interest sharing policy implemented in the UK SIPP businesses.
The integration of the Mercer SIPP and SSAS portfolios acquired in September 2022 was successfully completed during the course of 2023, and the books of business acquired performed in line with expectations.
New business volumes remained generally disappointing across the Group, but this needs to be viewed in conjunction with the fact that certain areas of the business would only see better volumes upon an improved technology-based service offering, and that potential strategic developments of the Group’s technology platforms have been paused pending the outcome of the Jambo transaction. All strategic projects remain on hold whilst the Group awaits the change of control regulatory approvals previously referred to,
Finance review
Financial performance in the year
The principal key performance indicators used by the Board to assess the financial performance of the Group are as per Table 1 below.
The Group reports both basic and adjusted financial key performance indicators in Table 1 and 2 below, as the impact of non-recurring movements does not allow for a clear understanding of operating performance without highlighting key non-recurring elements.
The Group reported revenues of £28.1 million for 2023 (2022: £24.1 million). The 17% uplift in revenues over 2022 is largely attributable to a full year’s revenue contribution from the 2022 acquisition of the SIPP and SSAS books from Mercer, which contributed £2.3 million in additional revenues, and the additional £3.2 million interest income earned as a result of the new SIPP interest sharing policy. This offset the shortfalls in new business revenues across the Group.
Profit before other items on both a reported and adjusted basis for 2023, was £3.2 million and £5.8 million respectively (£3.3 million and £4.7 million respectively), and the latter represented a healthy uplift compared to 2022.
The uplift in adjusted profit before other items over 2022 was principally due to the impact of the client interest sharing policy incepted in the SIPP businesses in July 2023 which flowed through to the bottom line.
On a like-for-like basis, adjusted profit before tax was similar to the previous year, with 2023 showing £3.1 million (2022 £2.8 million), although on a statutory basis the pre-tax result for 2023 was significantly lower at £0.4 million (2022 £1.6 million). This reduction was primarily driven by the one-off, non-recurring professional advisory and legal fees of £1.2 million incurred in relation to the proposed acquisition of the Company by Jambo.
In addition, as set out below in Table 2, there were a number of non-recurring income and expense items that are added back to the reported measure for Profit Before Tax so as to give a better picture of the operating performance of the business. For 2023, this included £0.6 million (2022: £Nil) of deferred consideration and old debtors previously recognised in the sale of the Company Management and Trustee Services businesses in 2021, £0.2 million of deferred consideration previously recognised on the Berkeley Burke and Mercer acquisitions in 2020 and 2022 respectively that were ultimately not deemed to be recoverable (2022: £Nil), £0.5 million (2022: £0.5 million) of one-off costs in relation to management restructuring and legal costs and £0.1 million (2022: £Nil) advisory fees paid for the independent strategic review undertaken in the first part of the year.
Table 1
| KPI | Definition | 2023 (reported) | 2022 (reported) | 2023 (adjusted) | 2022 (adjusted) |
| Revenue (£’000s) | Income derived from the provision of services. | 28,078 | 24,094 | 28,078 | 24,599 |
| Recurring revenue (£’000s) | Revenue derived from annual management charges and/or contractual fixed fee agreements. | 22,686 | 22,219 | 22,686 | 22,219 |
| Interest income (£’000s) | Interest earned from the Group’s and customer cash balances | 3,740 | 531 | 3,740 | 531 |
| Profit before other items (£’000s) | Revenue less administrative expenses i.e. profit before finance income and costs, gain on disposal of subsidiary bargain purchase gain, goodwill impairment and gain on the call options and before taxation. | 3,200 | 3,321 | 5,824 | 4,686 |
| Profit before taxation (£’000s) | Revenue less administrative expenses and other items | 442 | 1,578 | 3,066 | 2,778 |
| Profit after taxation (£’000s) | Revenue less administrative expenses and other items less/add taxation charge/credit | 417 | 854 | 3,041 | 2,054 |
| Earnings per share (pence) | Profit after taxation attributable to shareholder of the Company divided by weighted average number of ordinary shares outstanding | 0.70 | 1.42 | 5.12 | 3.44 |
| Profit margin before other items (%) | Profit before other items divided by revenue. | 11% | 14% | 21% | 19% |
Adjusted measures are net of non-recurring costs and other exceptional items that do not form part of the normal course of business.
Table 2
| Revenue | Profit before other items | Profit before tax | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | |
| Reported measure | 28,078 | 24,094 | 3,200 | 3,321 | 442 | 1,578 |
| Add: adjustment due to revenue recognition policy change on acquisition | – | 505 | – | 505 | – | 505 |
| Add: integration and acquisition cost | – | – | – | 390 | – | 390 |
| Add: Project Atlantic professional costs | 1,202 | – | 1,202 | – | ||
| Less: bargain purchase gain on acquisition and gain on call options | – | – | – | – | – | (327) |
| Less: loss on disposal of companies and trust management | – | – | – | – | – | 162 |
| Less: movement in deferred consideration related to prior year acquisitions | – | – | 761 | – | 761 | – |
| Add: costs of strategic review | – | – | 135 | – | 135 | – |
| Add: other non-recurring costs | – | – | 526 | 470 | 526 | 470 |
| Adjusted measure | 28,078 | 24,599 | 5,824 | 4,686 | 3,066 | 2,778 |
Tax Charge and Earnings per Share
The tax charge for the year was £0.03 million (2022: £0.7 million). This was an effective tax rate of 6% (2022: 46%), which was lower than the rates noted in prior years due to the writeback of tax over provided for in prior years. In the year ended 31st December 2022, the Group’s effective tax rate was higher than the jurisdictional effective tax rate, as tax losses brought forward or incurred in that year in some jurisdictions could not be utilised by the profitable subsidiaries in other jurisdictions and dividends remitted to the holding company by overseas jurisdictions were higher than in prior years, thus resulting in a higher overall tax charge.
Earnings per share (“EPS”) for 2023 was 0.7 pence per ordinary share compared to 1.42 pence per ordinary share in 2022. The decrease was a direct result of the lower profits before tax as explained above. There were no dilutive factors in either 2023 or 2022.
Cashflows and Balance Sheet
Cash and cash equivalents amounted to £18.4 million as at 31st December 2023 (2022: £19.2 million), with net cash inflow from operating activities of £2.5 million for the year ended 31st December 2023 (2022: £5.3m).
The bank loan from RBSI, drawn down in 2021 and 2022 to finance the acquisition of the SIPP and SSAS books from Mercer, remained in place as at 31st December 2023. As at the year end the outstanding balance on the facility was £4.8 million (2022: £5.4 million).
Cash and cash equivalents, net of the above mentioned outstanding bank loan, as at 31st December 2023 amounted to £13.6 million (2022: £13.9 million).
As would be expected for a Group regulated in several jurisdictions, a significant proportion of the gross cash balance is required to underpin the regulatory capital and solvency requirements.
The cash and cash equivalents required for solvency purposes varies as other, non-cash, assets can be used to support the regulatory solvency requirement. The total regulatory capital requirement across the Group as at 31st December 2023 was £17.3 million (2022: £17.3 million).
As further disclosed in the notes to the financial statements, the Carey (“Options”) v Adams case came to a conclusion in 2022 and was settled during the course of that year. During the course of 2023 it was therefore possible to quantify the likely exposure to similar cases with the same profile. In a similar manner, but in an unrelated case, Options was unsuccessful in the Judicial review hearing of a previously determined case by the Financial Ombudsman Scheme.
As a result, this case has been settled by the professional indemnity insurers, and cases with similar characteristics have now been provided for as at 31st December 2023. Whilst a provision has been established for the estimated likely amounts payable in relation to such claims, the Group has recognised an asset equal to an equivalent recovery of such exposure from the Group’s professional indemnity insurers, such that the net assets indicated in the consolidated statement of financial position are not affected. Further details in relation to the provisions held are set out in note 26 to the financial statements.
Within the consolidated statement of financial position, the Group recognised accrued income in the form of work performed for clients but not yet billed, as well as accrued interest income, of £3.1 million as at 31st December 2023 (2022: £0.9 million). Additionally, deferred income (included within current liabilities in the statement of financial position), relating to annual fees invoiced but not yet earned, amounted to £3.7 million (2022: £3.8 million). Both these figures give good visibility of cash collections and, in the case of deferred income, revenue still to be earned through the Income Statement in the coming months.
Dividend
The Board is not proposing a final dividend (2022: 0.60 pence per ordinary share), as, under the terms of the Scheme offer, any dividend declared would be deducted from the overall consideration payable by Jambo in respect of the potential acquisition, with potential adverse tax consequences for shareholders. As a result, the total proposed dividend for 2023 amounted to Nil pence per ordinary share (2022: 1.20 pence per ordinary share).
Operational Performance
Pensions
The Group’s pension administration businesses continue to be the largest revenue generating stream, accounting for 84% of total Group revenues (2021: 77%), excluding interest earned on client interest sharing policy.
Total revenue, excluding interest on client funds, across the Group’s pension businesses amounted to £20.4 million (2022: £18.5 million). The full year of the Mercer SIPP and SSAS acquisition during 2022 contributed £2.8 million of revenue in 2023 (2022: £0.5 million in 4 months).
In addition to the above pension administration revenue, the Pensions division also benefited from the increase in market interest rates and the implementation of its interest sharing policy within the Group’s SIPP businesses, which was incepted in July 2023 to bring the Group’s policy in line with market norms. Across the whole of the pension division, interest income for 2023 amounted to £3.0 million (2022: £0.3 million). 68% of this amount (2022: 86%) was attributable to the SIPP businesses.
The administration of the Group’s QROPS products continues to be the largest revenue generator within the pensions division, accounting for £9.0 million of revenue (2022: £9.4 million) and remains a robust and predictable revenue stream. Since the UK pension legislation changes in 2017, these products are no longer a growth driver. There remains a small net attrition rate on the QROPS book which is expected to continue as the member age profile gradually increases and members look to take advantage of flexi-access benefits. The administration of such schemes is undertaken in Malta and Gibraltar.
The SIPP businesses, both Options Personal Pensions and London & Colonial Services Limited, contributed total pension administration revenues of £4.7 million in 2023 (2022: £4.1 million). As noted above, the increase is down to the full year benefit of the Mercer SIPP book of business acquired in September 2022.
The Group’s Options Corporate pension auto-enrolment business generated revenue of £4.1 million in 2023 (2022: £3.4 million) and has performed as expected in a relatively mature marketplace.
The final revenue stream of the pensions divisions comes from the SSAS and EBC third-party administration businesses. These contributed revenues of £2.7 million in 2023 (2022: £1.6 million), with the uplift again being down to a full year contribution from the Mercer SSAS book acquired in September 2022.
Life Assurance
The combined revenues of the two life assurances businesses in Gibraltar was £4.0 million in 2023 (2022: £5.0 million). Those businesses did not generate any new business revenues from the Group’s short term annuity product, which had contributed circa £0.8 million of revenue in 2022.
The main products for the life companies remain the flexible annuity products for both private wealth and pension solutions. Whilst there has been a small increase in illustrations requested and provided during 2023, disappointingly we have not seen conversions increase, and the Group has struggled to broaden the range of IFAs that utilise the products.
During the latter part of the year, the life companies revisited the pricing of the flexible annuity products and capped the establishment fee. Whilst this potentially reduces any upfront fees, it is anticipated that this will make the product more compelling and attractive to the larger potential policyholders.
The Group retains its intention to broaden the range of products that will be available through the two life companies, and it is expected that over time this should allow stronger organic growth. However, part of that strategy will be reliant on the finalisation of the technology review instigated as part of the strategic review but subsequently deferred in the light of the proposed acquisition of the Company by Jambo which would determine what systems could and should be used as the main administration platform for the Group.
Regulatory developments – Consumer Duty
The Consumer Duty rules introduced by the Financial Conduct Authority in the UK came into effect on 31st July 2023.
These rules require regulated firms to act to deliver good outcomes for retail customers.
These outcomes relate to:
- Products and services;
- Price and value;
- Consumer understanding; and
- Consumer support.
The new rules require firms to consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. As well as acting to deliver good customer outcomes, firms will need to understand and evidence whether those outcomes are being met.
They apply to all UK retail customers, whether serviced by firms based in the UK or in other jurisdictions such as Gibraltar.
The Group recognised the importance of the new rules and established a project group to identify the key factors to be considered in assessing the rules, develop new or amended rules and processes (including data gathering) to enable the Group to comply with its Consumer Duty obligations and to oversee such compliance.
The 31st July 2023 deadline was met in all material aspects, with some minor additional processes and procedures being identified for future development.
The process is ongoing and the Group continues to prioritise the delivery of good outcomes for its retail customers.
Outlook
The future direction of the STM Group is currently awaiting the outcome of the applications by Jambo to the Gibraltar and Maltese regulatory authorities for change of control approvals pursuant to the proposed acquisition by Jambo of the whole of the issued share capital of the Company, and to sanction the completion of the transaction that was approved by 99.99 % of Scheme shares voted on 6th December 2023.
In the meantime, other than the potential exit strategy of the Options master trust from the UK workplace pensions marketplace, which had been agreed by both the PLC board and the potential acquirer as set out in the Scheme document, there is minimal ability to make strategic decisions on the business.
On 14th June 2024, the Board announced that the Group had signed a commercial agreement with Smart Pensions Limited in which, subject to approval by the trustees and regulator, members transferring from Options Master trust to Smart would result in Smart paying a consideration to the Group. It is anticipated that, over a two-year period, this consideration is likely to amount to circa £4.7million. In addition, the Group also entered into an introducers agreement with Smart at the same time, whereby any new members introduced to Smart by the Group’s existing or new intermediary contacts would lead to introductory commission income for the Group. The agreement is in place for a maximum period of three years, and management estimates that the quantum of such additional introductory commission could lie in the range of £1.0 million to £5.0 million over the three-year period.
Notwithstanding the above, the Group’s businesses continue to perform in line with expectations, and underlying performance for 2024 will continue to benefit from the interest sharing policies for the SIPP businesses that were implemented in the second half of 2023.
Interest sharing policies for the other parts of the Group have now been agreed, and these are in the process of being rolled out. It is anticipated that this will provide additional contribution for 2024, although, given the ongoing uncertainty around market interest rates, it is not possible to forecast any incremental contribution over market expectations with any material degree of accuracy
Whilst the technology review referred to above remains on hold as a result of the offer by Jambo, that process will need to be recommenced once the potential acquisition has been approved by the regulators in Malta and Gibraltar.
As noted in my 2022 report, the outcome of any technology reviews will no doubt determine the strategy that the Plc board will take going forward. The UK and expatriate pension space remains buoyant and exciting, with opportunities to differentiate the business from industry peers, but only if the technology can support a self-serve administration process.
I would like to take this opportunity to thank all my STM colleagues, and particularly Therese Neish, who returned as interim CFO on a fixed-term contract which was expected to see the conclusion of the acquisition, for their continued hard work and professionalism in carrying out their duties.
The Board looks forward to updating you on the progress of the proposed acquisition of the Company by Jambo in due course.
Alan Kentish
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
| Notes | Year ended 31 December 2023 £000 | Year ended 31 December 2022 £000 | |
| Revenue | 8 | 28,078 | 24,094 |
| Administrative expenses | 9 | (24,878) | (20,773) |
| Profit before other items | 10 | 3,200 | 3,321 |
| OTHER ITEMS | |||
| Bargain purchase gain | 4 | - | 327 |
| Gains on revaluation of financial instruments | - | 11 | |
| Loss on disposals of subsidiaries | 3 | - | (162) |
| Loss on disposal of fixed assets | (96) | - | |
| Finance costs | (689) | (322) | |
| Depreciation and amortisation | 13,14 | (1,973) | (1,597) |
| Profit before taxation | 442 | 1,578 | |
| Taxation | 12 | (25) | (724) |
| Profit after taxation | 417 | 854 | |
| OTHER COMPREHENSIVE INCOME | |||
| Items that are or may be reclassified to profit or loss | |||
| Foreign currency translation differences for foreign operations | 32 | 12 | |
| Total other comprehensive income | 32 | 12 | |
| Total comprehensive income for the year | 449 | 866 | |
| Profit attributable to: | |||
| Owners of the Company | 417 | 844 | |
| Non-controlling Interests | - | 10 | |
| 417 | 854 | ||
| Total comprehensive income attributable to: | |||
| Owners of the Company | 449 | 856 | |
| Non-controlling Interests | - | 10 | |
| 449 | 866 | ||
| Earnings per share basic (pence) | 20 | 0.70 | 1.42 |
| Earnings per share diluted (pence) | 20 | 0.70 | 1.42 |
The results for 2023 and 2022 relate to continuing activities.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
| Notes |
31 December 2023 £000 |
31 December 2022 £000 |
|||
| ASSETS | |||||
| Non-current assets | |||||
| Property and office equipment | 13 | 1,304 | 1,161 | ||
| Intangible assets | 14 | 21,444 | 22,125 | ||
| Financial assets | 15 | 1,839 | 1,762 | ||
| Deferred tax asset | 12 | 39 | 58 | ||
| Total non-current assets | 24,626 | 25,106 | |||
| Current assets | |||||
| Accrued income | 3,078 | 860 | |||
| Trade and other receivables | 16 | 7,349 | 8,461 | ||
| Receivables due from insurers | 26 | 27,441 | 488 | ||
| Cash and cash equivalents | 17 | 18,365 | 19,234 | ||
| Total current assets | 56,233 | 29,043 | |||
| Total assets | 80,859 | 54,149 | |||
| EQUITY | |||||
| Called up share capital | 18 | 59 | 59 | ||
| Share premium account | 18 | 22,372 | 22,372 | ||
| Retained earnings | 14,443 | 14,382 | |||
| Other reserves | 18 | (2,279) | (1,843) | ||
| Equity attributable to owners of the Company | 34,595 | 34,970 | |||
| Non-controlling interests | - | (68) | |||
| Total equity | 34,595 | 34,902 | |||
| LIABILITIES | |||||
| Current liabilities | |||||
| Liabilities for current tax | 425 | 788 | |||
| Trade and other payables | 21 | 13,271 | 12,517 | ||
| Provisions | 26 | 27,441 | 488 | ||
| Total current liabilities | 41,137 | 13,793 | |||
| Non-current liabilities | |||||
| Other payables | 22 | 4,808 | 5,050 | ||
| Deferred tax liabilities | 12 | 319 | 404 | ||
| Total non-current liabilities | 5,127 | 5,454 | |||
| Total liabilities and equity | 80,859 | 54,149 | |||
STATEMENT OF CONSOLIDATED CASH FLOW
FOR THE YEAR FROM 1 JANUARY 2023 TO 31 DECEMBER 2023
| Notes | Year ended 31 December 2023 £000 | Year ended 31 December 2022 (restated) £000 | |
| OPERATING ACTIVITIES | |||
| Profit for the year before tax | 442 | 1,578 | |
| ADJUSTMENTS FOR: | |||
| Depreciation of property and office equipment | 13 | 620 | 673 |
| Amortisation of intangible assets | 14 | 1,353 | 924 |
| Loss on disposal of property and office equipment | 96 | 4 | |
| Unrealised gains on financial instruments | (77) | (11) | |
| Bargain purchase gain | 4 | - | (327) |
| Taxation paid | (454) | (619) | |
| (Increase)/decrease in trade and other receivables including insurers | (25,841) | 22,246 | |
| (Increase)/decrease in accrued income | (2,218) | 558 | |
| Increase in trade and other payables including insurers | 28,541 | (19,737) | |
| Net cash generated from operating activities | 2,462 | 5,289 | |
| INVESTING ACTIVITIES | |||
| Purchase of property and office equipment | 13 | (170) | (165) |
| Increase in intangible assets | 14 | (672) | (937) |
| Purchase of financial instruments | - | (1,734) | |
| Acquisition of non-controlling interests | 5 | (400) | (120) |
| Additional consideration paid on prior acquisitions | (228) | - | |
| Consideration paid on acquisition of portfolio | 4 | - | (3,454) |
| Net cash absorbed by from investing activities | (1,470) | (6,410) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Proceeds from bank loan | 21,22 | - | 4,463 |
| Repayments of bank loan | 21,22 | (551) | (550) |
| Interest paid on bank loan | (405) | (162) | |
| Lease liabilities paid | (581) | (724) | |
| Dividends paid | 18 | (356) | (891) |
| Net cash (absorbed by)/generated from financing activities | (1,893) | 2,136 | |
| (Decrease)/increase in cash and cash equivalents | (901) | 1,015 | |
| Effect of movements in exchange rates on cash and cash equivalents | 32 | 12 | |
| Cash and cash equivalents at the beginning of the year | 19,234 | 18,207 | |
| Cash and cash equivalents at the end of the year | 17 | 18,365 | 19,234 |
The comparative cash flow movements for the year ended 31st December 2022 have been restated to aggregate and reclassify certain flows in order to be consistent with the presentation adopted in the year ended 31st December 2023.
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
FOR THE YEAR FROM 1 JANUARY 2023 TO 31 DECEMBER 2023
| Share capital £000 | Share premium £000 | Retained earnings £000 | Treasury shares £000 | Foreign currency translation reserve £000 | Share based payments reserve £000 | Other reserve £000 | Total £000 | Non- controlling Interests £000 | Total Equity £000 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2022 | 59 | 22,372 | 14,429 | (549) | (93) | 162 | - | 36,380 | (452) | 35,928 | |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | |||||||||||
| Profit for the year | - | - | 844 | - | - | - | - | 844 | 10 | 854 | |
| Other comprehensive income | |||||||||||
| Foreign currency translation differences | - | - | - | - | 12 | - | - | 12 | - | 12 | |
| Transactions with owners, recorded directly in equity | |||||||||||
| Acquisition of non-controlling interests | - | - | - | - | - | - | (1,375) | (1,375) | 374 | (1,001) | |
| Dividends paid | - | - | (891) | - | - | - | - | (891) | - | (891) | |
| At 31 December 2022 and 1 January 2023 | 59 | 22,372 | 14,382 | (549) | (81) | 162 | (1,375) | 34,970 | (68) | 34,902 | |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | |||||||||||
| Profit for the year | - | - | 417 | - | - | - | - | 417 | - | 417 | |
| Other comprehensive income | |||||||||||
| Foreign currency translation differences | - | - | - | - | 32 | - | - | 32 | - | 32 | |
| Transactions with owners, recorded directly in equity | |||||||||||
| Acquisition of non-controlling interests | - | - | - | - | - | - | (468) | (468) | 68 | (400) | |
| Dividends paid | - | - | (356) | - | - | - | - | (356) | - | (356) | |
| At 31 December 2023 | 59 | 22,372 | 14,443 | (549) | (49) | 162 | (1,843) | 34,595 | - | 34,595 | |