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STM forecasts 2021 revenue growth of around 7%
StockMarketWire.com
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Cross-border financial services provider STM said it expected to achieve revenue growth of around 7% in 2021 after it reduced its expectations for new business wins.
For 2020, meanwhile, the company said it expected to deliver results in line with market expectations, including revenue of £23.7 million and a pre-tax profit of £2.0 million.
'As part of the 2021 budget planning cycle, the board has now taken the decision to adopt a more prudent methodology to its guidance for the year ending 31 December 2021 and beyond,' STM said.
'This is set against a backdrop of ongoing Covid-19 pandemic concerns, as well as very low interest rates and uncertainty in the financial markets.'
STM said the revised approach primarily affected the level of new business for its life assurance and self-invested personal pensions (SIPP) products.
For the life assurance businesses, it woulnd't include any new policies from EU member states as a result of the continuing uncertainty surrounding Brexit, and what, if any, passporting rights Gibraltar will have after 2020 year-end.
'In addition, the board has now assumed that no new short-term life annuities should be included in the group's FY21 and FY22 expectations given these products are difficult to predict due to their long lead time,' STM said.
'This is especially so in the current economic environment although the opportunity and product remain viable.'
'The board has also now concluded that it would not be prudent to include any growth in the new business run rate for our expatriate SIPP revenue.'
'Similarly, the board is now assuming new UK SIPP business will be limited to current partnerships and introducers only, with a measured new business volume being generated by them and assuming no revenue from known but as yet untested partnerships.'
STM also said that IT investments, as well as an acquisition accounting exercise carried out on the Berkeley Burke acquisition, had resulted in an increased amortisation charge.
'We therefore now anticipate revenue growth of circa 7% for FY21 year-on-year, whilst operating expenses are only forecasted to increase marginally and thus enhanced EBITDA margins will be delivered,' the company said.
'The improved EBITDA margin is largely as a result of both direct savings and increased operational efficiencies on the back of the IT projects invested in during the year.'
'Further investment is expected in this area which has been reflected in the board's revised financial expectations.'
At 9:12am: (LON:STM) STM Group PLC share price was 0p at 28.5p
Story provided by StockMarketWire.com
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