STMicroelectronics Annual Report 2013

FY2013 Annual Report · STMicroelectronics

Loading PDF…

ANNUAL REPORT
& ACCOUNTS

2013

STM Group plc strives to be the provider of choice for
cross-border investors, entrepreneurs and expatriates
by offering clear, innovative and impartial
financial and commercial solutions which help
clients protect and grow their investments.

We believe that clients’ assets need to be administered
pro-actively by providing up-to-date and efficient
solutions. We have considerable expertise in a wide range
of international fiduciary and administration products and
services.

03 » Highlights

05 » Chairman’s Statement

07 » Chief Executive Officer’s Review

10 » Directors’ Report

11 » Board of Directors

12 » Statement of Directors’ Responsibilities

12 » Directors’ Remuneration Report

13 » Corporate Governance

14 » Independent Auditors’ Report

15 » Consolidated Statement of Comprehensive Income
16 » Consolidated Statement of Financial Position
17 » Company Statement of Financial Position

18 » Consolidated Statement of Cash Flows

19 » Statement of Consolidated Changes in Equity

19 » Statement of Company Changes in Equity

20 » Notes to the Financial Statements

37 » Notice of Annual General Meeting

38 » Company Information

ANNUAL REPORT & ACCOUNTS 2013

Gibraltar
Corporate and trustee
service providers,
insurance management,
QROPS, QNUPS, Life
Bonds.

Jersey
Corporate and trustee
service providers

Malta
Wealth protection using
tax treaties, corporate
and trustee services,
insurance management,
QROPS, QNUPS

Cyprus
Corporate and trustee
service providers

Spain
Legal and tax services for
expatriates and Spanish
residents

ANNUAL REPORT & ACCOUNTS 2013

Julian Telling
Chairman

THE CREATION OF A NEW BUSINESS AND PRODUCT
DEVELOPMENT TEAM WILL FOCUS ON LAUNCHING NEW
PRODUCTS TAILORED TO SUIT OUR CLIENTS’ NEEDS AND
INCREASING OUR DISTRIBUTOR NETWORKS.

I am pleased to report that 2013 has been
a year of continued growth for STM.
This growth has been seen mainly in its
pensions and STM Life divisions. Whilst
profitability has lagged relative to turnover
as we invest in this year of change, the
Board is confident this will improve in
2014 with increased efficiencies as well
as the development of new products and
distribution networks.

I am pleased to note that the pensions
divisions continued to grow and see new
applications, albeit at a more gradual pace
when compared to the significant surge
experienced in 2012. In addition, STM Life
has this year seen increases in turnover
and profitability as well as the launch of
its German tax compliant product. Other
unique products are expected to follow
during 2014 following the creation of the
Business and Product Development team.

Prior to the year end, STM made changes
to the Board with Alan Kentish being
appointed as the Director of Business
and Product Development. This, together
with the creation of a new Business and
Product Development team, will focus
on launching new products tailored to
suit our clients’ needs and increasing
our distributor networks. Therese Neish,
previously the Group Financial Controller,
assumed the role of Chief Financial Officer
and was officially appointed to the Board
subsequent to the year end.

STM currently employs circa 150 individuals
across its jurisdictions and I would like to,
on behalf of the Board, offer my sincere
thanks to them for their continued efforts
and dedication. The quality, commitment
and professionalism of STM’s management
team and staff continue to be one of our
major strengths.

Chairman
11 March 2014

ANNUAL REPORT & ACCOUNTS 2013
6

ANNUAL REPORT & ACCOUNTS 2013

Colin Porter
CEO

WE EXPECT OUR PENSIONS DIVISION TO CONTINUE
THE STEADY GROWTH EXPERIENCED IN 2013 WHICH,
TOGETHER WITH THE ANNUAL FEES FROM THE
EXISTING BUSINESS, SHOULD SEE CONSIDERABLE
INCREASE IN BOTH TURNOVER AND PROFITABILITY.

I am pleased to present the annual
results for the year ended 31 December
2013 which, once again, show a steady
increase in growth. As per management’s
expectations, this growth has very much
come from the pensions division and I am
pleased to note that STM Life is starting to
follow suit.

In July 2013 we announced the launch of
our first proprietary product for the German
market and further unique products tailored
to suit our clients’ needs are expected to be
launched during 2014.

As predicted, the traditional Corporate
and Trustee Services (“CTS”) market has
remained challenging due to the downturn
in activity resulting from the current
economic climate.

Whilst revenues continue to increase,
profitability has remained fairly constant.
Contributing to this temporary disparity
is the ongoing investment in delivering
on our growth strategy and a one-off
increase in certain provisions. Changes
in our clients’ circumstances within our
CTS divisions (both Gibraltar and Jersey)
have resulted in the respective boards and
Group taking the prudent approach of
increasing the provisions for bad debts.
Whilst management continues to pursue
these debtors the increase in provisions has
resulted in a decrease in profitability of circa
£0.8 million.

OPERATIONAL OVERVIEW

STM PENSIONS
As noted above, 2013 has seen further
growth in the pensions divisions making it
the Group’s largest division with 44% of the
Group’s revenue. Revenue has increased by
64% to £5.9 million in 2013 (2012: £3.6
million). Whilst STM Malta remains the
larger of the pensions divisions, the growth
in 2013 has come from both Malta and
Gibraltar in almost equal volumes.

Whilst the initial surge of new applications
experienced in 2012 has moderated, as
a result of new competitors entering the
market, STM continues to see a steady flow
of new applications. This, coupled with
the fact that pensions business is based
on a stable and long term annuity clients
and income, provides visibility of healthy
revenues in the pensions departments in
2014 and beyond.

CORE CTS DIVISION
CTS income currently accounts for 44%
(2012: 56%) of the Group’s revenue
amounting to £5.8 million in 2013 (2012:
£6.5 million), generated predominantly in
Jersey and Gibraltar. These two jurisdictions
typically have a different market focus which
gives STM a better product spread.

As stated in last year’s Annual Report I
am very pleased to note that the new
management team set up in Jersey in 2012
has performed well and in line with the
Group’s expectations. STM Jersey’s revenue
amounted to £3.4 million (2012: £3.4
million) which was typically derived from
non-domiciled individuals investing into the
UK market.

ANNUAL REPORT & ACCOUNTS 2013Gibraltar’s CTS revenue stream has seen a reduction in income
for 2013 down to £2.4 million, from £3.1 million in 2012. As
previously noted, this company’s customer base is significantly
more focused on the UK expatriate who has moved or
invested into the European marketplace. Management has
seen a downturn in transactional business as a result of the
Eurozone crisis, as well as clients assessing the need for their
structures going forward. Expectations are that the resultant
loss of revenue has now bottomed out.

As noted above, circumstances have come to light relating
to some of our clients’ financial positions which have
brought into question the recoverability of some of the
balances outstanding. Whilst STM continues to pursue these
outstanding balances, and is confident of their recovery, a
prudent approach has been taken by increasing the bad debt
provisions in both of these divisions.

STM LIFE
Whilst revenues for this division are still slow there has been a
significant growth in the year with turnover of £0.6 million in
2013 compared to £0.2 million in 2012.

As well as the launch of the German tax compliant product in
July 2013 management is working on developing further niche
products and expanding the distribution networks. We are
confident that STM Life will become a significant contributor
towards the Group’s income and profitability in future periods.

OTHER TRADING DIVISIONS AND NEW
INITIATIVES
Other divisions are mainly insurance management, advisory
and the Spanish office. Income in these divisions has
decreased from £1.3 million in 2012 to £1.1 million in 2013.
This is largely as a result of decreased revenues in the Spanish
office immediately following a management restructure. The
new management team is now in place and committed to
increasing revenue and profit margins during 2014.

FINANCIAL POSITION
For the year to 31 December 2013, the Group recorded
turnover of £13.4 million (2012: £11.6 million) and an
EBITDA of £0.9 million (2012: £1.0 million). Administrative
expenses have increased from £10.6 million in 2012 to
£12.4 million in 2013. This is largely as a result of investment

in delivering on our new strategy, the increase in bad
debt provisions as noted above, as well as the increase in
commission payable on the pensions business, which is as
expected given the increase in growth in this part of the
business.

The depreciation and amortisation charge, a non cash
expense to the income statement, has decreased from £0.8
million in 2012 to £0.3 million in 2013. This is as a result
of the Board’s decision to fully amortise the Zenith client
portfolio in 2012.

STM’s taxation charge for the year at £0.4 million is
predominantly down to a timing difference in the Malta
subsidiary which will allow a recovery in 2014 upon the
declaration of dividends up to the holding company.

In line with most services businesses, the Group had accrued
income in the form of work performed for clients but not yet
billed at the year end of £3.0 million (2012: £3.0 million).
This provides some immediate visibility of billable fees in the
early part of 2014.

The Group’s debtor days and overall trade debt has decreased
considerably in 2013 as part of a more structured debtor
management program as well as the increase in bad
debt provision as noted above. Trade receivables as at 31
December 2013 amounted to £2.5 million, down from £3.0
million as at 31 December 2012.

Deferred income, representing fees billed in advance yet to
be credited to the statement of total comprehensive income,
have increased considerably to £1.6 million (2012: £0.5
million). This is indicative of both the increase in the pensions
business as well as the CTS divisions being more efficient in
their annual billing process.

The Group ended the year with cash of £4.1 million (2012:
£3.4 million), having paid out further consideration on
acquisitions amounting to £0.2 million and made net bank
borrowing repayments of £0.8 million.

GROUP FINANCING
During the year the Group fully repaid its bank loans
with RBS International Limited and only had £100,000
outstanding on bank borrowings in the form of an overdraft
facility. This was fully settled subsequent to the year end.

ANNUAL REPORT & ACCOUNTS 2013In addition to bank financing, there remain convertible
loan notes (“Loan Notes”) to the value of £3.5 million at
31 December 2013 which expire and will be fully settled
on 19 March 2014. I am pleased to announce that we will
be issuing £3.8 million of new Loan Notes to existing and
new Loan Note holders in order to replace the existing Loan
Notes. The new Loan Notes will be on similar terms and
conditions to those currently in place and will have a fixed
term of 2 years with an option to convert into new ordinary
shares after the first year. This new issue will also increase the
Company’s working capital and thus allow greater focus on
growth.

BOARD CHANGES DURING THE YEAR
As announced prior to the year end, Alan Kentish, previously
the Chief Financial Officer, assumed the newly created role of
Director of Business and Product Development, with Therese
Neish assuming the role of Chief Financial Officer. Therese
was appointed to the Board on 17 January 2014.

DIVIDENDS
Despite the cautious optimism of 2014 the Board recognises
that it is too early to instigate a new dividend policy at this
point in time however will continue to review the position
during 2014.

CURRENT TRADING AND OUTLOOK
We expect our pensions division to continue the steady
growth experienced in 2013 which, together with the
annual fees from the existing business, should see
considerable increase in both turnover and profitability.
Given the resources being invested in STM Life by way
of business development we expect to launch a series of
new products during 2014 which will ensure this division
continues to grow and reach critical mass during this year.

The CTS business together with the Spanish office
continue to look at ways of increasing efficiencies and
reducing costs and this is expected to result in increased
profit margins during 2014.

Together with the changes to the Board, STM has also
created a new Business and Product Development team.
This team is working well and already making good
progress through creating a series of unique niche
products to suit our clients’ needs as well as increasing
our distribution networks.

The Board of STM looks forward to 2014 with cautious
optimism and will provide a further update at the earliest
opportunity.

Chief Executive Officer
11 March 2014

ANNUAL REPORT & ACCOUNTS 2013The Directors of STM Group plc present
their Report for the year to 31 December
2013 together with the accounts of the
Group and the independent auditors’
report for the period. These will be laid
before the shareholders at the Annual
General Meeting to be held on 21 May
2014.

PRINCIPAL ACTIVITIES
AND BUSINESS REVIEW
The principal activity of the Group
during the year was the structuring and
administration of clients’ assets.

RESULT AND DIVIDENDS
The loss for the year of £136,000 (31
December 2012: £4,326,000) has been
charged to reserves.

The Board recommends that no dividends
be paid for the year ended 31 December
2013 (31 December 2012: Nil).

Therese Neish has been appointed as a
Director since the last Annual General
Meeting and a resolution to confirm her
appointment will be tabled at the Annual
General Meeting.

All remaining Directors offer themselves
for re-election.

POLITICAL AND
CHARITABLE DONATIONS
The Group’s charitable donations for
the period amounted to £4,985 (31
December 2012: £1,337). There were no
political contributions in either period.

INTERNATIONAL
FINANCIAL REPORTING
STANDARDS (IFRS)
These financial statements were prepared
under IFRS and interpretations adopted
by the International Accounting Standards
Board (IASB).

ISSUED ORDINARY
SHARE CAPITAL OF THE
COMPANY
At 28 February 2014

International Financial
Options Limited
Hearth Investments Limited
Southern Rock Insurance
Company Limited, Rock
Holdings Limited and Arron
Banks
Clifton Participations Inc

Nightingale Equities Inc

KAS Bank NV

Quest Traders Limited

20.69

14.22

9.82

5.99

5.46

4.86

3.26

SUBSTANTIAL INTERESTS
Save as disclosed in the table below, the
Directors are not aware of any person
who directly or indirectly is interested in
3% or more of the issued ordinary share
capital of the Company as at 28 February
2014 or any persons who, directly or
indirectly, jointly or separately, exercise or
could exercise control over the Company.

INDEPENDENT AUDITORS
KPMG Audit LLC were appointed as
auditors to the Company during the
year and being eligible, have expressed
their willingness to continue in office. A
resolution to re-appoint KPMG Audit LLC
as independent auditors of the Company
will be proposed at the Annual General
Meeting.

ANNUAL GENERAL
MEETING
The Notice of the Annual General
Meeting to be held on 21 May 2014 is set
out on page 37

By order of the Board

Company Secretary
18 Athol Street
Douglas
Isle of Man IM1 1JA
11 March 2014

DIRECTORS
Details of the Directors of the Company
who served during the period and to
date, and their interests in the shares of
the Company were:
Alan Roy Kentish
Colin Douglas Porter
Michael Ross Riddell
Julian Philip Telling
Therese Gemma Neish (Appointed 17
January 2014)

Alan Kentish has an interest in 3,202,150
ordinary shares – 2,850,000 of these
shares are held in the name of Clifton
Participations Inc and form part of the
assets of the Perros Trust of which Alan
Kentish is a potential beneficiary.

Colin Porter has an interest in 1,271,113
ordinary shares.
Julian Telling has an interest in 85,000
ordinary shares.
Therese Neish has an interest in 72,556
ordinary shares.

ANNUAL REPORT & ACCOUNTS 2013JULIAN PHILIP TELLING
NON-EXECUTIVE CHAIRMAN

Following a brief spell in the Fleet Air Arm of the Royal Navy, Julian trained for a career in retail
financial services. In 1983 he established Falcon Group, which grew into one of the largest
independent financial services groups in the UK.
After being admitted to AIM in 2005 under the name Sumus plc, the business merged with
Lighthouse plc in 2008 and Julian chose to leave to pursue other ventures. Julian is a partner in
a small private equity firm and also holds a number of directorships in both public and private
companies. Julian also has a professional pilot’s licence and flies part-time for a small airline as
well as acting as a CAA examiner.

COLIN DOUGLAS PORTER
CHIEF EXECUTIVE OFFICER

Colin is a Barrister and Solicitor of the High Court of New Zealand and was admitted to the bar in
2000. He also holds a double major business degree in Finance and International Business. Colin
joined STM as CEO of the Gibraltar and Jersey offices in June 2008, and brings with him a wealth
of experience in the company and trust management field, having previously held senior positions
with other international trust companies.

THERESE GEMMA NEISH BA(HONS) FCCA
CHIEF FINANCIAL OFFICER

Therese trained with KPMG where she qualified as a Chartered Certified Accountant in 2003,
having previously studied Accountancy & Financial Studies at Exeter University. Therese joined
STM in 2003 in the Insurance Management division where she managed and sat on the board
of various insurance companies. In 2009 Therese became Group Financial Controller and more
recently was appointed Chief Financial Officer in January 2014.

ALAN ROY KENTISH ACA ACII AIRM
DIRECTOR OF PRODUCT AND BUSINESS DEVELOPMENT

Alan qualified as a Chartered Accountant in 1989 with Ernst & Whinney, specialising in the
financial services industry. In 1993 he moved to Ernst & Young, Gibraltar and shortly afterwards
qualified as an Associate of the Chartered Insurance Institute. In 1997, Alan joined Fidecs and set
up its insurance management division, FIM. Alan became Chief Financial Officer of the Group
when it floated in 2007 and more recently Director of Product and Business Development, with
a focus on driving STM’s suite of proprietary products and Group revenue as STM continues to
expand its product propositions in the international financial services markets.

MICHAEL ROSS RIDDELL CA
NON-EXECUTIVE DIRECTOR

Mike is the Managing Director and a part owner of Greystone Trust Company, a licensed trust
and corporate service provider in the Isle of Man which he joined in 2005. A Canadian Chartered
Accountant, Mike has worked in trust and corporate and financial services since 1988 in Canada,
the Cayman Islands and the Isle of Man. Mike is a director of Hearth Investments Limited, which
holds a significant shareholding in STM

ANNUAL REPORT & ACCOUNTS 2013BOARDOF DIRECTORSSTATEMENT OF DIRECTORS’ RESPONSIBILITIES IN
RESPECT OF THE DIRECTORS’ REPORT AND THE
FINANCIAL STATEMENTS

The Directors are responsible for keeping
proper accounting records that are sufficient
to show and explain the Parent Company’s
transactions and disclose with reasonable
accuracy at any time its financial position.
They have general responsibility for taking
such steps as are reasonably open to them
to safeguard the assets of the Group and
to prevent and detect fraud and other
irregularities.

The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website. Legislation governing the
preparation and dissemination of financial
statements may differ from one jurisdiction to
another.

The Directors are responsible for preparing the
Directors’ Report and the financial statements
in accordance with applicable law and
regulations. In addition, the Directors have
elected to prepare the financial statements
in accordance with International Financial
Reporting Standards.

The financial statements are required to give a
true and fair view of the state of affairs of the
Group and Parent Company and of the profit
or loss of the Company for that period.

In preparing these financial statements, the
Directors are required to:

• select suitable accounting policies and then

apply them consistently;

• make judgements and estimates that are

reasonable and prudent;

• state whether they have been prepared

in accordance with International Financial
Reporting Standards; and

• prepare the financial statements on the

going concern basis unless it is inappropriate
to presume that the Group and Parent
Company will continue in business.

Director

Executive Directors

Alan Kentish
Colin Porter

Non-Executive Directors

Julian Telling
Michael Riddell

Remuneration

Notes

£230,000
£230,000

£40,000
£12,000

a,b

a,c

Notes
a. No Directors received any benefits in the form of either pension contributions or share based incentives.
b. Julian Telling Consulting Limited invoices the Company for the Director services provided by Julian Telling.
c. Greystone Trust Company Limited invoices the Company for the Director services provided by Michael Riddell.

ANNUAL REPORT & ACCOUNTS 2013The Board is responsible for establishing the strategic direction of the
Company, monitoring the Group’s trading performance and appraising
and executing development and acquisition opportunities. During the year
the Company held regular Board meetings in the Isle of Man at which
financial and other reports, including reports on acquisition opportunities,
were considered and, where appropriate, voted on.

Details of the Directors’ beneficial interests
in Ordinary Shares is set out in the Directors’
Report. The Directors intend to comply with
Rule 21 of the AIM Rules relating to Directors’
dealings and will take all reasonable steps
to ensure compliance by any employees of
the Company to whom Rule 21 applies. The
Company has, in addition, adopted the Share
Dealing Code for dealings in its Ordinary
Shares by Directors and senior employees.

The Directors recognise the importance of
sound corporate governance. The Company
intends to comply with the QCA Guidelines
so far as is practicable and appropriate for a
public company of its size and nature.

The Board has established an audit committee
and a remuneration committee both with
formally delegated duties and responsibilities.
The audit committee comprises Michael
Riddell, as the Chairman, and Julian Telling,
and the remuneration committee comprises
Julian Telling, as the Chairman, and Michael
Riddell.

The terms of reference for the audit
committee provide that it will receive
and review reports from the Company’s
management and the Company’s auditors
relating to the annual and interim accounts
and the accounting and internal control
systems in use throughout the Group.

The terms of reference for the remuneration
committee provide that it will review the
scale and structure of the Executive Directors’
remuneration and the terms of their service
contracts. The remuneration and terms and
conditions of appointment of the non-
executive directors will be set by the Board.
No Director may participate in any meeting
at which discussion or decision regarding
his own remuneration takes place. The
remuneration committee will also administer
the long term incentive plan (LTIP) awards and
set any performance criteria thereunder.

The Directors have set up a Risk Management
Committee comprising the CEO, CFO and the
STM Group Risk Management Officer (RMO).
The Committee has delegated the review of
the risks applicable to the business and the
actions required to reduce those risks to the
RMO and his team. Regular reports of the
status of this review have been provided to
the Board.

The Directors do not consider that, given the
size of the Board, it is appropriate at this stage
to have a nomination committee.

ANNUAL REPORT & ACCOUNTS 2013REPORT OF THE INDEPENDENT AUDITORS,
KPMG AUDIT LLC, TO THE MEMBERS
OF STM GROUP PLC

We have audited the financial statements
of STM Group PLC for the year ended
31 December 2013 which comprise the
Group Statement of Comprehensive
Income, the Group and Parent Company
Statements of Financial Position, the
Group Statement of Cash Flows and
the Group and Company Statement of
Changes in Equity and the related notes.
The financial reporting framework that
has been applied in their preparation is
applicable law and International Financial
Reporting Standards (IFRSs).

This report is made solely to the
Company’s members, as a body. Our
audit work has been undertaken so
that we might state to the Company’s
members those matters we are required
to state to them in an auditor’s report and
for no other purpose. To the fullest extent
permitted by law, we do not accept or
assume responsibility to anyone other
than the Company and the Company’s
members as a body, for our audit work,
for this report, or for the opinions we
have formed.

RESPECTIVE
RESPONSIBILITIES
OF DIRECTORS AND
AUDITOR
As explained more fully in the Directors’
Responsibilities Statement set out on
page 12, the Directors are responsible for
the preparation of financial statements
that give a true and fair view. Our
responsibility is to audit, and express
an opinion on, the financial statements
in accordance with applicable law and
International Standards on Auditing (UK
and Ireland). Those standards require us
to comply with the Auditing Practices
Board’s (APB’s) Ethical Standards for
Auditors.

SCOPE OF THE AUDIT
OF THE FINANCIAL
STATEMENTS
An audit involves obtaining evidence
about the amounts and disclosures in
the financial statements sufficient to give

reasonable assurance that the financial
statements are free from material
misstatement, whether caused by fraud
or error. This includes an assessment
of: whether the accounting policies are
appropriate to the Group’s circumstances
and have been consistently applied and
adequately disclosed; the reasonableness
of significant accounting estimates
made by the Directors; and the overall
presentation of the financial statements.

OPINION ON THE
FINANCIAL STATEMENTS
In our opinion the financial statements:

• give a true and fair view of the state

of the Group’s and Parent Company’s
affairs as at 31 December 2013 and
of the Group’s loss for the year then
ended; and

• have been properly prepared in

accordance with IFRSs.

KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM99 1HN

11 March 2014

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

Revenue
Administrative expenses
Profit before other items

OTHER ITEMS

Finance Costs
Depreciation and amortisation
Loss on sale of fixed assets
Adjustments to carrying value of investments
Profit/ (Loss) before taxation
Taxation
Loss after taxation

OTHER COMPREHENSIVE INCOME

Foreign currency translation differences for foreign operations
Total comprehensive loss for the year
Earnings per share basic (pence)
Earnings per share diluted (pence)

Year ended
31 December 2013
£000

Year ended
31 December 2012
£000

13,357
(12,419)
938

11,550
(10,555)
995

(359)
(310)
-
-
269
(380)
(111)

(25)
(136)
(0.21)
(0.21)

(314)
(819)
(23)
(3,834)
(3,995)
(271)
(4,266)

(60)
(4,326)
(8.43)
(8.43)

Notes

There have been no discontinued activities in the year. Accordingly, the above results relate solely to continuing activities.

ANNUAL REPORT & ACCOUNTS 2013As at 31 December 2013

ASSETS

Non-current assets

Property, plant and equipment
Intangible assets
Investments
Total non-current assets

Current assets

Accrued income
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets

EQUITY

Called up share capital
Share premium account
Reserves
Total equity attributable to equity shareholders

LIABILITIES

Current liabilities
Liabilities for current tax
Trade and other payables
Total current liabilities
Non-current liabilities
Other payables
Total non-current liabilities
Total liabilities and equity

31 December
2013
£000

31 December
2012
£000

Notes

1,156
16,907
614
18,677

3,000
4,214
4,090
11,304
29,981

53
20,828
382
21,263

613
8,105
8,718

-
-
29,981

1,297
16,886
73
18,256

3,031
4,523
3,384
10,938
29,194

53
20,828
532
21,413

439
3,892
4,331

3,450
3,450
29,194

CD Porter
Chief Executive Officer

TG Neish
Chief Financial Officer

11 March 2014

ANNUAL REPORT & ACCOUNTS 2013As at 31 December 2013

31 December
2013
£000

31 December
2012
£000

Notes

ASSETS

Non-current assets

Property, plant and equipment

Investments
Intangible assets
Total non-current assets

Current assets

Accrued income
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets

EQUITY

Called up share capital
Share premium account
Reserves
Total equity attributable to equity shareholders

LIABILITIES

Current liabilities
Trade and other payables
Total current liabilities
Non-current liabilities
Other payables
Total non-current liabilities
Total liabilities and equity

859

16,052
48
16,959

-
4,102
20
4,122
21,081

53
20,828
(6,758)
14,123

6,958
6,958

-
-
21,081

953

16,052
66
17,071

23
5,555
101
5,679
22,750

53
20,828
(5,579)
15,302

3,998
3,998

3,450
3,450
22,750

CD Porter
Chief Executive Officer

TG Neish
Chief Financial Officer

11 March 2014

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES

Year ended
31 December 2013
£000

Year ended
31 December 2012
£000

Notes

Profit/(Loss) for the year before tax

ADJUSTMENTS FOR:

Depreciation and amortisation
Loss on sale of fixed assets
Adjustments to investments
Taxation paid
Decrease in trade and other receivables
Decrease/(increase) in accrued income
Increase/(decrease) in trade and other payables
Net cash from operating activities

INVESTING ACTIVITIES

Acquisition of property, plant and equipment
Acquisition of treasury shares
Acquisition of investments
Increase in intangibles
Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Bank loan repayments
Cash consideration from shares issued
Net cash from financing activities
Increase in cash and cash equivalents

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

Analysis of cash and cash equivalents during the year
Increase in cash and cash equivalents
Translation of foreign operations
Balance at start of year
Balance at end of year 16

269

(3,995)

310
-
-
(206)
309
31
1,746
2,459

(134)
(54)
(714)
(56)
(958)

(911)
-
(911)
590

590
16
3,384
3,990

819
23
3,834
(168)
401
(113)
(402)
399

(111)
-
(450)
(159)
(720)

(1,056)
1,498
442
121

121
(44)
3,307
3,384

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

Share
Capital
£000

Share
premium
£000

Retained
earnings
£000

Treasury
Shares
£000

Translation
reserve
£000

Total
£000

Balance at 1 January 2012

19,051

5,066

(144)

(80)

23,936

TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Loss for the year

Other comprehensive income

Foreign currency translation differences

Transactions with owners, recorded directly in equity

Shares issued in the year
Dividend paid
Exchange gain on equity

At 31 December 2012

Balance at 1 January 2013

TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Loss for the year

Other comprehensive income

Foreign currency translation differences

Transactions with owners, recorded directly in equity

Shares issued in the year
Dividend paid
Exchange gain on equity
Treasury shares purchased
At 31 December 2013

—

10
—
—

—

—
—
—
—
53

— (4,266)

—

(60)

1,777
—
—

20,828

—

—
—
—
—
20,828

—
—
—

740

(111)

(25)

—
—
—
—
604

—

—
—
—

(144)

—

—
—
—
(54)
(198)

—

(4,266)

—

—
—
16

(64)

—

—
—
40
—
(24)

(60)

1,787
—
16

21,413

(111)

(25)

—
—
40
(54)
21,263

Balance at 1 January 2012

Loss for the year
Shares issued in year
Dividend paid
31 December 2012

Balance at 1 January 2013

Loss for the year
Shares issued in year
Dividend paid
31 December 2013

For the year from 1 January 2013
to 31 December 2013

Share
Capital
£000

Share
premium
£000

Retained
earnings
£000

—
10
—
53

—
—
—
53

19,051

—
1,777
—
20,828

20,828

—
—
—
20,828

(910)

(4,669)
—
—
(5,579)

(5,579)

(1,179)
—
—
(6,758)

Total
£000

18,184

(4,669)
1,787
—
15,302

15,302

(1,179)
—
—
14,123

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

1. REPORTING ENTITY
STM Group Plc (the “Company”) is a company incorporated and domiciled in the Isle of Man and was admitted to trading
on the London Stock Exchange AIM on 28 March 2007. The address of the Company’s registered office is 18 Athol
Street, Douglas, Isle of Man, IM1 1JA. The consolidated financial statements of the Group as at, and for the year ended,
31 December 2013 comprise the Company and its subsidiaries (see note 25) (together referred to as the “Group” and
individually as ”Group entities”) and the Group’s interest in associates and jointly controlled entities. The Group is primarily
involved in financial services.

2. BASIS OF PREPARATION
The financial information has been prepared on the basis of the accounting policies set out in note 3.

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) and interpretations adopted by the International Accounting Standards Board (“IASB”) and in accordance with Isle
of Man law.

b. Functional and presentation currency

These consolidated financial statements are presented in Pounds Sterling (£) which is the Company’s functional currency

c. Use of estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.

The estimates and assumptions which have a significant risk of resulting in a material adjustment to the carrying value of
assets and liabilities are included in the following notes:

- Note 13 – Depreciation of property, plant and equipment

- Note 14 – Measurement of goodwill

- Note 21 – Provisions

d. Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, except where investments and other
financial instruments are held at fair value.

e. Employee benefit trusts

The Company contributes to two employee benefit trusts. It is deemed that these trusts are controlled by the Company and
are therefore included within the consolidated financial statements of the Group.

f. Consolidated statement of cashflows

The comparative figures in the consolidated statement of cashflows show a reclassification between the movement in
accrued income and the increase in intangibles. This has not impacted the overall Group position for the year ended 31
December 2012.

g. Going Concern

The financial statements have been prepared on a going concern basis which assumes the Group and the Company will
have sufficient funds to continue its operational existence for the foreseeable future covering at least twelve months from
the date of the financial statements. The Group requires funds both for short-term operational needs as well as for the
repayment of the convertible loan notes of £3.5 million which become payable on the 19 March 2014. The Group has
subscriptions for £3.8 million of loan notes which will be issued on 19 March 2014, these will carry similar terms and
conditions as the convertible loan notes that are currently in existence and will be repayable two years from date of issue.
The Group continues to generate cash flows from the current operations which together with the available cash and
the issue of the new convertible loan notes provide the required liquidity for the operations as well as repayment of the
convertible loan notes currently in issue.

3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements

a. Basis of consolidation

i. Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases.

ii. Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are
eliminated in preparing the consolidated financial statements.

b. Foreign currency

i. Foreign currency transactions

Transactions in foreign currencies are translated to the functional currency of the Group at the exchange rate at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated at
the exchange rate at that date. The resulting gain or loss is recognised in the statement of comprehensive income.

ii. Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are
translated to sterling at exchange rates at the reporting date.

c. Revenue

Revenue is derived from the provision of services and is recognised in the statement of comprehensive income in proportion
to the stage of completion of the services at the reporting date on an accruals basis.

Revenue derived from pension trustee and administration fees is split between the Initial Fee and the Management Fee. In
the first year of membership the initial and management fees are recognised in full at the time of processing the application
so as to reflect the time effort incurred in accepting the new member and processing their application. In subsequent years
a proportion of the management fee is reflected as income at the time of invoicing to reflect the timing of the work carried
out for the member. The other proportion is amortised over the period to the next renewal date.

d. Accrued income

Accrued income represents billable time spent on the provision of services to clients which has not been invoiced at the
reporting date. Accrued income is recorded at the staff charge-out rates in force at the reporting date, less any specific
provisions against the value of accrued income where recovery will not be made in full. In terms of pension business the
accrued income is based on the number of applications received but for which an invoice has not been raised yet.

e. Property, plant and equipment

i. Recognition and measurement

Items of property and office equipment are measured at cost less accumulated depreciation and impairment losses. Cost
includes expenditures that are directly attributable to the acquisition of the asset and bringing it into use.

Gains and losses on disposal of an item of property and office equipment are determined by comparing the proceeds from
disposal with the carrying amount of property and office equipment, and are recognised net within other income in profit or
loss.

ii. Depreciation

Depreciation is recognised in the statement of comprehensive income on a reducing balance basis over the estimated useful
lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease
term or the estimated useful life. Depreciation commences once assets are in use.

The rates in use on a reducing balance basis are as follows:

Office equipment
Motor vehicles
Leasehold improvements

25%
25%
Over the life of the leases

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

f. Financial instruments

Financial assets and liabilities are recognised in the Group’s statement of financial position when the Group becomes party
to the contractual provisions of the instrument.

i. Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market.
Loans and receivables comprise trade and other receivables and are recognised initially at fair value and subsequently at
amortised cost. Generally, this results in their recognition at nominal value less any allowance for any doubtful debts.

ii. Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received. After initial recognition,
interest bearing loans and borrowings are subsequently measured at amortised cost.

The Group’s convertible loan notes have been recorded as a liability as the option to redeem or convert to equity was not
taken up and therefore these will run to term.

ANNUAL REPORT & ACCOUNTS 2013

For the year from 1 January 2013
to 31 December 2013

iii. Investments

Investments are carried at fair value, subject to provisions for impairment where the current value of the investment is considered
to be less than cost. Impairment losses are recognised in the statement of comprehensive income. Investments are reviewed for
impairment at each year end.

iv. Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at banks and in hand with an original maturity of
three months or less.

v. Share capital

Ordinary shares are classified as equity. Costs directly attributable to the issue of the shares are recognised as a deduction from
share premium.
Treasury shares are those shares purchased by the STM Group Employee Benefit Trust (“EBT”) for distribution to executives under
the Long Term Incentive Plan arrangements, which have yet to be allotted to specific employees.

g. Operating leases

Payments under operating leases are charged directly to the income statement on a straight line basis over the term of the lease.

h. Finance leases

Assets held under finance leases are capitalised at their initial cost. Rentals are set against accounts payable on the straight line basis.

i. Employee benefits

The Group operates a defined contribution pension plan. Obligations for contributions to defined contribution pension plans are
recognised as an expense in the income statement when they are due.

Certain executives, on achieving their performance and services criteria, will be awarded with shares in STM Group Plc which are held
within an employee benefit trust. The expense is released to the income statement over a period of three years on a straight line basis.

j. Finance income

Finance income comprises interest income on funds invested and dividend income. Interest income is recognised as it accrues using
the effective interest method.
Finance expense comprises interest on borrowings. Interest expense is charged to the income statement using the effective interest
method.

k. Income tax expense

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement.

Current tax is the expected tax payable on the taxable income for the year using enacted tax rates, updated for previous period
adjustments.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between carrying amounts of assets
and liabilities for financial reporting purposes and for tax purposes. Deferred tax is not provided in respect of goodwill. Deferred tax
is measured at the tax rates expected to be enacted when they reverse.

l. Intangible assets

i. Goodwill

Goodwill that arises on the acquisitions of subsidiaries is included in intangible assets. Goodwill represents the excess of the cost
of the acquisition over the Group’s interest in the net fair value of the identifiable assets and liabilities of the acquiree. Goodwill is
measured at cost less accumulated impairment losses. An annual impairment review is undertaken.

ii. Product development

Product development relates to internal development expenditure incurred in the development of the Groups’ new products. When
these costs meet the recognition criteria of IAS 38 ‘Intangible Assets’ they are capitalised and amortised on a straight line basis from
product launch.

m. Impairment

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is
objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more
events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying
amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Losses are
recognised in the statement of comprehensive income.

Significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in
groups that share similar credit risk characteristics.

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

Any impairment losses would be recognised in the statement of comprehensive income.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised.

The decrease in impairment loss is reversed through the statement of comprehensive income.

The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible
assets that have indefinite lives, the recoverable amount is estimated at each reporting date.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A
cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets
and groups. Impairment losses are recognised in the income statement.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill
allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro-rata basis.

n. Earnings per share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the
profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding
during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise shares relating
to deferred consideration, and the effect of outstanding options. The effects of potential ordinary shares are reflected in diluted EPS
only when their inclusion in the calculation would decrease EPS or increase the loss per share.

o. Deferred income

Deferred income relates to the element of fixed fee income that has been billed in advance which has not been earned as at the year
end and is released over the period to which it relates.

p. Borrowing costs

Borrowings are recognised initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at amortised
cost; any difference between proceeds net of transactions costs and the redemption value is recognised in the income statement over
the period of the borrowing using effective interest method.

q. Provisions

Provisions are recognised when there is a present legal or constructive obligation as a result of a past event, for which it is probably
that an outflow of economic benefits will be required to settle the obligation, and where a reliable estimate can be made of the
amount of the obligation.

r. New standards and interpretations

The following new standards and interpretations (as endorsed by the European Union (EU)) are mandatory for the first time this year;
however, following consideration and review they are believed to either not be relevant to the Group or do not have a significant
impact on the Group’s financial statements apart from additional disclosures:

•

IFRS 1 (amended)

Government Loans for First-time adopters

IFRS 7 (amended)

Financial Instruments: Disclosures

IFRS 10

IFRS 11

IFRS 12

IFRS 13

IAS 1 (amended)

IAS 19 (revised)

IAS 27 (revised)

IAS 28 (revised)

Consolidated financial statements

Joint Arrangements

Disclosure of Interests in Other Entities

Fair Value Measurement

Presentation of Items in Other Comprehensive Income

Employee Benefits

Separate Financial Statements

Investments in Associates and Joint Venture

In addition a number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31
December 2013, and have not been applied in preparing these consolidated financial statements. None of these are expected to
have an effect on the consolidated financial statements of the Group.

ANNUAL REPORT & ACCOUNTS 2013

For the year from 1 January 2013
to 31 December 2013

s. Disputes and potential legal matters

The Group may at times be involved in disputes arising in the ordinary course of business. In accordance with applicable accounting
requirements, the Group provides for potential losses that may arise out of these disputes when the potential losses are probable
and estimable. Disputes in respect of legal matters are subject to many uncertainties and the outcome of individual matters cannot
be predicted with certainty.

4. DETERMINATION OF FAIR VALUES
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-
financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following
methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes
specific to that asset or liability.

a. Intangible assets - goodwill

The fair value of Goodwill acquired in a business combination is based on the excess of the fair value of the consideration over the
fair value of the underlying assets and liabilities acquired less any impairment considered necessary.

b. Investments

The fair value of investments is based on the carrying value of those investments less any impairment considered necessary.

c. Property, plant and equipment

The fair value of property, plant and equipment recognised as a result of a business combination is based on carrying values. The
carrying value of items of plant and equipment has been assessed as equal to its fair value.

5. FINANCIAL RISK MANAGEMENT
The Group has exposure to the following risks from its use of financial instruments:

• Credit risk

• Liquidity risk

• Market risk

• Interest rate risk

• Currency risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes
for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout
these consolidated financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Board has established the Risk Management Committee, which is responsible for developing and monitoring the Group’s risk
management policies. The committee reports regularly to the Board of Directors on its activities.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market condition and the Group’s activities. The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and
obligations.

a. Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from clients

Trade and other receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each client. The demographics of the
Group’s client base, including the default risk of the country in which the clients operate, has less of an influence on credit risk. There
is no one client to which a significant percentage of the Group’s revenue can be attributed.

The Group establishes a provision for impairment that represents its estimate of incurred losses in respect of trade and other
receivables. Further detail in respect of credit risk is provided in note 21 to these financial statements.

b. Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions. A further detail in respect of liquidity risk is provided in note 21 to these financial statements.

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

c. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
Group’s income or the value of its holdings of financial instruments. The object of market risk management is to manage and control
market risk expenses within acceptable parameters, while optimising the return.

The market place is robust in that the target market is the “mid-tier millionaires” who are more resilient to adverse changes in the
economy. The Board of Directors believe that this mitigates a significant element of the Group’s market risk.

d. Interest rate risk

The Company bank borrowings at the year end were not significant and therefore have minimal exposure to interest rate movements.

e. Currency risk

The Group has a small exposure to currency risk in relation to the investment in STM Nummos and STM Cyprus. This is mitigated
by the fact that assets and liabilities held by STM Nummos and STM Cyprus are in its functional currency of Euros (€).

The Company has minimised exposure to foreign exchange rates, with the majority of transactions being carried out in its
functional currency of Pounds Sterling (£).

f. Capital management

The Board’s policy is to maintain a strong capital base, which is defined as share capital and retained earnings, so as to maintain
investor, creditor and market confidence and to sustain future development of the business.

6. SEGMENTAL INFORMATION
STM Group has five reportable segments: Corporate Trustee Services, Pensions, Insurance Management, STM Life and Other Services.
Each segment is defined as a set of business activities generating a revenue stream and offering different services to other operating
segments. The Group’s operating segments have been determined based on the management information reviewed by the CEO and
board of Directors.

The Board assesses the performance of the operating segments based on turnover generated. The costs of certain segments within
the Group are predominantly centrally controlled and therefore the allocation of these is based on utilisation of arbitrary proportions.
Management believe that this information and consequently profitability could potentially be misleading and would not enhance
the disclosure above.

The following table presents the turnover information regarding the Group’s operating segments:

Operating Segment

Corporate Trustee Services
Pensions
Insurance Management
STM Life
Other Services

Analysis of the Group’s turnover information by geographical location is detailed below:

Geographical Segment

Gibraltar
Jersey
Malta
Other

Turnover

2013
£000

5,834
5,861
591
560
511
13,357

Turnover

2013
£000

4,635
3,366
4,925
431
13,357

2012
£000

6,477
3,566
536
166
805
11,550

2012
£000

4,131
3,347
3,421
651
11,550

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

7. INVESTMENTS
Group – Other investments
Investments relate to UK Government Gilts which pay coupons of 4.75% and 4.25% per annum and mature on 7 December 2030
and 7 September 2039.

Company – Investments in subsidiaries

Acquisitions of the Company

Shares in group undertakings
Balance at start of year
Adjustments to prior year
Acquisitions
Balance at end of year

31 December 2013
£000

31 December 2012
£000

16,052
—
—
16,052

Subsequent performance of acquisitions
As a result of the fact that the Group has materially changed the composition of the acquired companies’ cost structure by fully integrating
them into the existing major trading operations of the Group, the Board of Directors consider it to be impractical to disclose the underlying
profitability of the acquired companies after the date of acquisition.

8. REVENUE

Revenue from administration of assets

Total revenues

31 December 2013
£000

31 December 2012
£000

13,357

11,550

9. STM LIFE ASSURANCE PCC PLC
These consolidated financial statements include the results for STM Life Assurance PCC Plc (“STM Life”), a 100% owned subsidiary.
STM Life’s principal activity is that of the provision of life assurance services. The Company has a licence under the Financial Services
(Insurance Companies) Act by the Gibraltar Financial Services Commission to carry on linked long term insurance business.

The financial statements for STM Life include the financial performance of both the long term fund and shareholders funds. For the
purposes of these consolidated financial statements, however, only the shareholders funds and surplus on the long term fund have
been included as reflecting the movement and balances in the long term fund would distort the Group’s results.

Within total revenue of the Group of £13,357,000 there is an amount of £560,000 relating to revenue attributable to STM Life. The
financial performance and balance on the long term fund is as follows:

Technical Account – Long term business

Gross premiums written
Policy withdrawals
Net operating expenses
Change in long term business provisions
Increase in linked long term reserves
Surplus on long term fund

Assets held to cover linked liabilities

Open Market Value

Cost

Technical provision for linked liabilities

Balance at start of year
Increase in technical provision for linked liabilities
Foreign exchange movement on linked liabilities
Balance at end of year

Year ended
31 December 2013
£000

Year ended
31 December 2012
£000

31,305
(1,442)
(430)
(63)
(28,946)
424

15,201
(734)
(1,174)
(56)
(13,069)
168

31 December 2013
£000

31 December 2012
£000

61,790

63,547

32,899

34,953

31 December 2013
£000
32,899
28,946
(55)
61,790

31 December 2012
£000
20,142
13,069
(312)
32,899

The provision for linked liabilities is equal to the open market value of the specified assets attached to all outstanding policies on the
valuation date.

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

10. ADMINISTRATIVE EXPENSES
Included within administrative expenses are personnel costs as follows:

Average number of employees
Company

The average number of staff employed by the Company during the year including Directors was 14 (2012:- 13)

Wages and salaries
Social insurance costs
Pension contributions
Total personnel expenses

11. PROFIT BEFORE OTHER ITEMS

Group

31 December 2013
£000
5,952
325
71
6,348

31 December 2012
£000
5,544
308
46
5,898

31 December 2013
Number

31 December 2012
Number

Average number of people employed (including executive directors)

146

147

Profit before other items of £938,000 (31 December 2012 £995,000), was arrived at after charging the following to the income
statement:

12. TAXATION

Directors’ remuneration
Auditor’s remuneration
Loss on sale of assets
Operating lease rentals

31 December 2013
£000
512
182
—
667

31 December 2012
£000
512
177
23
514

As at the statement of financial position date various subsidiaries had tax losses brought forward which are based on tax
computations prepared and submitted to the tax authorities.

Current tax expense
Release from prior years
Total tax expense

Reconciliation of existing tax rate

Profit/(loss) for the year

Total income tax expense

Profit/(loss) before tax
Income tax using the Company’s domestic rate -0%
Effect of tax rates in other jurisdictions
Total tax expense

31 December 2013
£000
380
—
380

31 December 2012
£000
348
(77)
271

31 December 2013
£000

31 December 2012
£000

269

380

269
—
380
380

(3,995)

271

(3,995)
—
348
348

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

13. PROPERTY, PLANT AND EQUIPMENT

Group

Costs
As at 1 January 2012
Additions at cost
Disposals
As at 31 December 2012
As at 1 January 2013
Additions at cost
Disposals
As at 31 December 2013
Depreciation
As at 1 January 2012
Charge for the year
Disposals
As at 31 December 2012
As at 1 January 2013
Charge for the year
Disposals
As at 31 December 2013

Net Book Value

As at 31 December 2013
As at 31 December 2012

Company

Costs

As at 1 January 2012
Additions at cost

As at 31 December 2012

As at 1 January 2013
Additions at cost

As at 31 December 2013

Depreciation
As at 1 January 2012
Charge for the year

As at 31 December 2012

As at 1 January 2013
Charge for the year

As at 31 December 2013

Net Book Value

As at 31 December 2013
As at 31 December 2012

Motor
Vehicles
£000

Office
Equipment
£000

Leasehold
Improvements
£000

Total
£000

12
—
—
12
12
—
—
12

9
1
—
10
10
—
—
10

2
2

1,319
111
(51)
1,379
1,379
127
—
1,506

417
147
(28)
536
536
145
—
681

825
843

869
—
—
869
869
7
—
876

294
123
—
417
417
130
—
547

329
452

2,200
111
(51)
2,260
2,260
134
—
2,394

720
271
(28)
963
963
275
—
1,238

1,156
1,297

Office
Equipment
£000

Leasehold
Improvements
£000

Total
£000

639
5

644

644
46

690

32
64

96
59

155

535
548

567
—

567

567
—

567

81
81

162

162
81

243

324
405

1,206
5

1,211

1,211
46

1,257

113
145

258

258
140

398

859
953

ANNUAL REPORT & ACCOUNTS 201314. INTANGIBLE ASSETS

Group

Costs

Balance as at 1 January 2012
Additions

Balance at 31 December 2012

Balance as at 1 January 2013
Additions

Balance at 31 December 2013

Amortisation and impairment
Balance as at 1 January 2012
Charge for the year
Adjustments

Balance at 31 December 2012

Balance as at 1 January 2013
Charge for the year

Balance at 31 December 2013

Carrying amounts

At 1 January 2012
At 31 December 2012
At 1 January 2013
At 31 December 2013

For the year from 1 January 2013
to 31 December 2013

Client
Portfolio
£000

Product
Development
£000

Total
£000

4,927
—

4,927

4,927
—

4,927

545
548
3,834

4,927

4,927
—

4,927

4,382
—
—
—

—
159

159

159
56

215

—
—
—

—

—
35

—
159
159
180

21,654
159

21,813

21,813
56

21,869

545
548
3,834

4,927

4,927
35

4,962

21,109
16,886
16,886
16,907

Goodwill
£000

16,727

—

16,727

16,727
—

16,727

—
—
—

—

—
—

—

16,727
16,727
16,727
16,727

Impairment testing for cash-generating units containing goodwill

All goodwill relates to the acquisitions made during the period from 28 March 2007 to 31 December 2013, and reflects the
difference between the identifiable net asset value of those acquisitions and the total consideration incurred for those acquisitions.

Goodwill is allocated to the Group’s operating entities and consequently to the generating units comprising these acquired
businesses. However, as subsequent to the acquisitions the acquired businesses have been integrated and are managed on a
unified basis it is more appropriate to allocate goodwill to three cash-generating units for the purposes of impairment testing,
being the Fidecs Group with a carrying value of £15,280,000; the Nummos Group with a carrying value of £470,000 and the
Fiduciaire Group with a carrying value of £977,000.

The Group tests goodwill annually for impairment with the recoverable amount being determined from value in use calculations
which are based on board approved cash flow projections. A pre-tax discount rate of 6% has been used in discounting the
projected cash flows. The valuations indicate sufficient headroom such that a reasonable potential change to key assumptions is
unlikely to result in an impairment of the related goodwill.

Based on the operating performance of the respective CGUs, no impairment loss was deemed necessary in the current financial
year.

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

14. INTANGIBLE ASSETS (continued)

Company

Costs

As at 1 January 2012
Additions

As at 31 December 2012

As at 1 January 2013
Additions

As at 31 December 2013

Amortisation and impairment

As at 1 January 2012
Charges for the year
Adjustments

As at 31 December 2012

As at 1 January 2013
Charges for the year

As at 31 December 2013

Carrying amounts

As at 1 January 2012

As at 31 December 2012

As at 1 January 2013

As at 31 December 2013

Client
Portfolio
£000

Product
Development
£000

4,927
—

4,927

4,927
—

4,927

545
548
3,834

4,927

4,927
—

4,927

4,382

—

—
66

66
4

—
—
—

—

—
22

—

Total
£000

4,927
66

4,993

4,993
4

4,997

545
548
3,834

4,927

4,927
22

4,949

4,382

Client portfolio represents the value assigned to the individual client portfolio acquired through the acquisition of Zenith Trust
Company Limited and was being amortised over nine years. However, this business has been fully integrated into the existing
trading operations to such an extent that the Board of Directors felt it was no longer possible to review for impairment and was
written off in the year ended 31 December 2012.

15. TRADE AND OTHER RECEIVABLES

Group

Trade receivables
Other receivables
Total

Company

Trade receivables due from related parties
Other receivables
Total

31 December 2013
£000
2,513
1,701
4,214

31 December 2013
£000
3,651
451
4,102

31 December 2012
£000
2,951
1,572
4,523

31 December 2012
£000
5,277
278
5,555

Within the Group’s other receivables is a balance of £446,000 which has been personally guaranteed by Alan Kentish.
Amounts due from related parties are unsecured, interest free and repayable on demand.
The Group’s exposure to credit risks and impairment losses related to trade and other receivables (excluding accrued income) are
described in note 21.

ANNUAL REPORT & ACCOUNTS 2013
16. CASH AND CASH EQUIVALENTS

Group

Bank balances
Cash and cash equivalents in the statement of financial position
Bank overdrafts
Cash and cash equivalents in the statement of cash flow

Company

Bank balances
Cash and cash equivalents in the statement of financial position
Bank overdrafts
Net cash and cash equivalents

17. CAPITAL AND RESERVES

Authorised, called up, issued and fully paid

53,446,549 ordinary shares of £0.001 each
(2012: 53,446,549 ordinary shares of £0.001 each)

Treasury shares

For the year from 1 January 2013
to 31 December 2013

31 December 2013
£000
4,090
4,090
(100)
3,990

31 December 2012
£000
3,384
3,384
—
3,384

31 December 2013
£000
20
20
(100)
(80)

31 December 2012
£000
101
101
—
101

31 December 2013
£000

31 December 2012
£000

The treasury shares relate to those shares purchased by the STM Group EBT for allocation to executives under the terms of the
Long Term Incentive Plan. The trustees held 502,735 (2012: 323,555) shares at 31 December 2013, amounting to £198,276
(2012: £144,767).

Share premium

During the year no shares were issued. In 2012 10,384,900 shares were issued for a total share premium of £1,847,582. During
2012, transaction costs of £70,000 were deducted from the share premium account.

Translation

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign
operations.

18. EARNINGS PER SHARE
Earnings per share for the year from 1 January 2013 to 31 December 2013 is based on the loss after taxation of £111,000 (2012:-
£4,266,000) divided by the weighted average number of £0.001 ordinary shares during the year of 53,446,549 basic (2012:-
50,624,640) and 53,446,549 dilutive (2012:- 50,624,640) in issue.

A reconciliation of the basic and diluted number of shares used in the year ended 31 December 2013 is:

Weighted average number of shares
Dilutive share incentive plan, options and contingent consideration shares
Diluted

53,446,549
—
53,446,549

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

19. TRADE AND OTHER PAYABLES
Group

Bank loans
Bank overdraft
Loans from related parties
Deferred income
Trade payables
Convertible Loan notes
Deferred and contingent consideration
Other creditors and accruals

Company

Bank loans
Bank overdraft
Owed to related parties
Convertible Loan notes
Deferred Consideration
Other creditors and accruals

31 December 2013
£000
—
100
58
1,578
463
3,450
25
2,431
8,105

31 December 2013
£000
—
100
2,529
3,450
—
879
6,958

31 December 2012
£000
911
—
57
547
268
—
198
1,911
3,892

31 December 2012
£000
911
—
2,367
—
158
562
3,998

As at 31 December 2013 the Company has £3.5 million of convertible loan notes (“Loan Notes”). The Loan Notes have a fixed term
of 4 years and carry an annual coupon of 7%, payable half yearly. The Loan Notes which are secured against all the assets of the
Group expire and will be fully repaid in March 2014.

As at 31 December 2012 the Group had two bank loans from Natwest Bank plc amounting to £0.9 million at variable rates of interest
ranging from 2.75% to 4.25%. These loans have been fully repaid during the year with the only remaining bank borrowing at the
statement of financial position date being a fixed bank overdraft facility with a rate of 4.5% and repayable on 31 January 2014. All
bank borrowings were secured by capital guarantees supplied by subsidiary companies.

Loans from related parties amount to £58,000 relate to a loan by the founding shareholders of Fidecs, the loan is unsecured and
interest bearing at 7% per annum.

Deferred income consists of fixed fee revenues billed in advance to clients which have not yet been earned as at the year end. These
amounted to £1,578,000 as at 31 December 2013 (31 December 2012: £547,000).

Deferred and contingent consideration

Under the terms of the acquisition of STM Nummos SL a further £25,000 may be payable to the vendors depending on certain
targets being achieved.

The Group’s exposure to liquidity risk related to trade and other payables is described in note 21.

20.

OTHER PAYABLES - AMOUNTS FALLING DUE IN MORE THAN ONE YEAR

Group

Convertible loan notes (note 19)

Company

Convertible loan notes (note 19)

31 December 2013
£000
—
—

31 December 2012
£000
3,450
3,450

31 December 2013
£000
—
—

31 December 2012
£000
3,450
3,450

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

21. FINANCIAL INSTRUMENTS

Credit Risk

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at
the reporting date was:

Trade and other receivables
Cash and cash equivalents

Carrying amount

31 December 2013
£000

31 December 2012
£000

4,214
4,090
8,304

4,523
3,384
7,907

The Group’s maximum exposure to credit risks relating to one entity or group of related entities amounts to less than 10% of the
overall trade receivable amount as at 31 December 2013 and 31 December 2012.

Impairment losses on trade receivables

The ageing of the Group’s trade receivables at the reporting date was:

Not past due
past due 0–30 days
past due 31–120 days
More than 120 days past due

Gross receivables
31 December 2013
£000
399
721
145
2,086
3,351

Impairment
31 December 2013
£000
—
—
—
(838)
(838)

Total
£000
399
721
145
1,248
2,513

Gross receivables
31 December 2012
£000
694
331
129
2,211
3,365

Impairment
31 December 2012
£000
—
—
—
(414)
(414)

Total
£000
694
331
129
1,797
2,951

Standard credit terms are 30 days from the date of receiving the fee note.

The movement in the allowance for impairment in respect of trade receivables during the period was:

Balance at start of year
Impairment loss increased/(released)
Balance at end of year

31 December 2013
£000

31 December 2012
£000

414
424
838

519
(105)
414

ANNUAL REPORT & ACCOUNTS 2013NOTES TO THE
FINANCIAL STATEMENTS

For the year from 1 January 2013
to 31 December 2013

21. FINANCIAL INSTRUMENTS (continued)
Based on historic default rates, the Group believes that no impairment allowance is necessary in respect of some of the
trade receivables older than a year and those that are not more than one year old. This is because, invariably, the Group are
administering clients’ assets and therefore have further recourses for the recoverability of any debts outstanding.

Liquidity Risk

The following are the Group’s contractual maturity liabilities, including estimated interest payments where applicable, and
excluding the impact of netting arrangements.

31 December 2013

Non-derivative financial liabilities
Bank overdraft
Trade payables
Deferred consideration
Loans from related parties
Convertible Loan Notes
Other creditors and accruals
Corporation tax payable

31 December 2012

Non-derivative financial liabilities
Bank loans
Bank overdraft
Trade payables
Deferred consideration
Loans from related parties
Convertible Loan Notes
Other creditors and accruals
Corporation tax payable

Carrying
amounts
£000

Conditional
cash flow
£000

6 months
or less
£000

6-12
months
£000

1-2
years
£000

100
463
25
58
3,450
2,431
613
7,140

—
—
—
—
—
—
—
—

Carrying
amounts
£000

Conditional
cash flow
£000

6 months
or less
£000

6-12
months
£000

1-2
years
£000

911
—
268
198
57
3,450
1,911
440
7,235

161
—
268
198
57
—
1,911
440
3,035

750
—
—
—
—
—
—
—
750

—
—
—
—
—
3,450
—
—
3,450

Currency, interest rate risk and market risk

The Company has minimal exposure to currency risk and market risk. The net impact to the results on interest bearing assets and
liabilities is also considered to be minimal.

22. LEASES

Operating Leases
Non-cancellable operating leases are payable as follows:

Less than one year
Between one year and five years
More than five years

31 December 2013
£000
635
1,861
1,766
4,262

31 December 2012
£000
667
2,122
2,119
4,908

The Group leases a number of offices from which they operate, the largest of which is for Montagu Pavilion which runs for a
further 10 years.

ANNUAL REPORT & ACCOUNTS 2013NOTES TO THE
FINANCIAL STATEMENTS

For the year from 1 January 2013
to 31 December 2013

22. LEASES (continued)
Finance Leases

Non-cancellable finance leases are payable as follows:

Less than one year
Between one year and five years
More than five years

23. RELATED PARTIES

Transactions with key management personnel and Directors’ Compensation
Key management compensation comprised:

Short-term employee benefits
Post-employment benefits
Share-based payments

31 December 2013
£000
8
3
—
11

31 December 2012
£000
7
11
—
18

31 December 2013
£000
512
—
—
512

31 December 2012
£000
512
—
—
512

Key management personnel and Director Transactions

Trusts and related parties connected to the Directors held 22.88% of the voting shares of the Company as at 31 December 2013.

Other related party transactions

As more fully explained in note 19, a loan of £58,000 has been provided to the Group by the founding shareholders of Fidecs (the
Company’s first acquisition) who are also shareholders.

The Group also leases its main premises from Fiander Properties Limited, a Company that is owned by three shareholders and a
Director of the Company. Rental costs of such premises for the year were £308,000 of which £nil was outstanding at 31 December
2013. The rental cost is at normal market rates.

The Group provided administration services to Gold Management Limited a company partly owned by Louise Kentish, spouse of
Alan Kentish, a Director of the Company. These services amounted to £5,800 for the period to 31 December 2013, of which £nil
was outstanding at 31 December 2013.

The Group provides services to subsidiaries of Rock Holdings Limited, a shareholder of the Company. These services amounted to
£234,000 during the year, of which £25,000 was outstanding at 31 December 2013.

Greystone Trust Company Limited, of which Michael Riddell is a director, charged the Company £36,300 for services rendered
during 2013, of which £nil was outstanding at 31 December 2013.

During the year the Group has incurred commissions to deVere Group; a company related to the Group by virtue of a shareholder
in common of £683,056. As at 31 December 2013 a balance of £210,046 was outstanding.

All services relating to the above transactions were carried out by the Group on an arm’s length basis and are payable/receivable
under the standard credit terms.

Ready Finance Ltd and Bespoke Finance Ltd, companies related to the Group by virtue of common ownership and directors owe
the Group a combined balance of £384,000 at 31 December 2013.

24. SHARE BASED PAYMENTS
The Long Term Incentive Plan (“LTIP”) provides incentives for certain executives. The plan is administered by the trustees of the STM
Group Employee Benefit Trust. The nominated executive is entitled to receive fully paid shares in STM (“STM shares”) providing
they achieve certain predetermined performance targets and also satisfy a two year employment condition.

The executive will receive the shares on the first day of dealing after the end of the two year employment condition. For 2013,
relating to the 2013 performance, no shares (2012: nil) were appointed to specific individuals.

ANNUAL REPORT & ACCOUNTS 2013For the year from 1 January 2013
to 31 December 2013

25. GROUP ENTITIES
Principal subsidiaries

As at 31 December 2013 the Company owned the following subsidiaries which are regarded as the principal trading operations of
the Group.

Group

Country of
incorporation

31 December
2013

31 December
2012

Activity

Ownership interest

STM Fidecs Limited

Isle of Man

100% directly

Holding company

STM Fidecs Management Limited

Gibraltar

100% indirectly

100% indirectly Administration of clients’ assets

STM Fidecs Insurance Management Limited

Gibraltar

100% indirectly

100% indirectly Administration of clients’ assets

STM Fiscalis Limited

Gibraltar

100% indirectly

100% indirectly Administration of clients’ assets

STM Fidecs Life, Health and Pensions Limited

Gibraltar

100% indirectly

100% indirectly Administration of clients’ assets

STM Fidecs Trust Company Limited

Gibraltar

100% indirectly

100% indirectly Administration of clients’ assets

STM Fidecs Central Services Limited

Gibraltar

100% indirectly

Services and Administration

STM Fidecs Pension Trustees Limited

Gibraltar

100% indirectly

100% indirectly Administration of clients’ assets

STM Fidecs Consumer Services Limited

STM Fiduciaire Trustees Limited

STM Fiduciaire Limited

STM Nummos SL

STM (Caribbean) Limited

STM Life Assurance PCC plc

Jersey

Spain

BVI

100% indirectly

100% indirectly Administration of clients’ assets

100% indirectly

100% indirectly Administration of clients’ assets

100% indirectly

100% indirectly Administration of clients’ assets

100% indirectly

100% indirectly Administration of clients’ assets

100% directly

Intellectual property holding company

Gibraltar

100% indirectly

Insurance company

Zenith Trust Company Limited

Jersey

100% indirectly

100% indirectly Administration of clients’ assets

STM Nummos Limited

STM Nummos Life SL

STM Malta Limited

STM Malta Trust and Company Management Limited

STM Malta Insurance Management Limited

England

100% directly

Holding company

Spain

Malta

100% indirectly

100% indirectly Administration of client assets

100% directly

Holding company

100% indirectly

100% indirectly Administration of client assets

100% indirectly

100% indirectly Administration of client assets

STM (Cyprus) Limited

Cyprus

100% directly

Administration of client assets

STM Fidecs Insurance Solutions Limited

Gibraltar

100% indirectly

100% indirectly Administration of client assets

26. SUBSEQUENT EVENTS

Subsequent to the year end and at the date of signing the Company had legal commitments to issue £3.8 million of new
convertible loan notes (“Loan Notes”) on 19 March 2014. The Loan Notes will have a fixed term of 2 years and carry a coupon
of 7%, payable half yearly. The Loan Notes can be converted into new ordinary shares of 0.1p each in the Company (“Ordinary
Shares”) at a price of 26p at the option of the holders following the release of the Company’s preliminary results for the year
ended 31 December 2014. Any Loan Notes not converted into new Ordinary Shares at that date will run to term. The Loan Notes
are secured against all the assets of the Group.

ANNUAL REPORT & ACCOUNTS 2013Notice is hereby given that the Annual General Meeting of the Company will be held on 21 May 2014 at 11am at 18 Athol Street,
Douglas, Isle of Man IM1 1JA for the purpose of considering and, if thought fit, passing the following resolutions:

Ordinary Resolutions

1. THAT the accounts for the year ended 31 December 2013 and the reports of the Directors and auditors thereon be received.

2. As Therese Gemma Neish has been appointed during the period since the last AGM, to confirm her appointment as a Director
of the Company.

3. THAT Alan Roy Kentish, who has retired from office by rotation in accordance with article 88 of the Company’s Articles of
Association (the “Articles”), be reappointed as a Director of the Company.

4. THAT Michael Ross Riddell, Colin Douglas Porter and Julian Philip Telling be reappointed as Directors of the Company.

5. THAT KPMG Audit LLC be reappointed as auditors of the Company to hold office from the conclusion of the Annual General
Meeting until the conclusion of the Annual General Meeting held in 2015.

6. THAT the Directors be authorised to issue up to a maximum of 100,000,000 ordinary shares of £0.001 each (“Ordinary Shares”)
in the capital of the Company, with such maximum number to be inclusive of any ordinary shares in issue at the date of the Annual
General Meeting.

Special Resolution

7. THAT the Directors be authorised to allot Ordinary Shares for cash as if the restrictions at Article 7.1 (Pre-emption) of the Articles
do not apply to such allotment, provided such allotment or allotments are limited to the allotment of Ordinary Shares up to an
aggregate nominal amount equal to 30 per cent of the aggregate nominal amount of all the Ordinary Shares currently in issue,
such authority to expire at the conclusion of the next annual general meeting of the Company after passing of this resolution (the
“First Period”) save that the Company may before the expiry of the First Period make an offer or agreement which would or might
require Ordinary Shares to be allotted after such expiry of the First Period (as the case may be) and the Directors of the Company
may allot Ordinary Shares in pursuance of such offer or agreement as if their authority conferred hereby had not expired.

By order of the Board

…………………………………………

Elizabeth A. Plummer
Company Secretary
18 Athol Street

Douglas

Isle of Man IM1 1JA

17 March 2014

Notes:
Resolutions 1 to 6 are to be proposed as Ordinary Resolutions. Resolution 7 is to be proposed as a Special Resolution requiring the approval of (i) on
a show of hands a majority of not less than 75 per cent of such members as are present and voting at the relevant meeting and are entitled under
the Articles to vote on a show of hands; or (ii) on a poll members of the Company holding not less than 75 per cent of the voting rights attributable
to the shares held by the members present and voting at the relevant meeting and entitled under these Articles to vote on a poll.

A member entitled to attend and vote is entitled to appoint a proxy or proxies to attend and, on a poll, vote instead of that member.
A proxy need not be a member of the Company. A form of proxy is enclosed. Proxy forms must be returned by post or by hand to the
office of the agent of the Company’s registrars, Computershare Investor Services PLC, The Pavilions, Bridgwater Rd, Bristol BS99 6ZY not
less than 48 hours before the time of holding of the meeting. The Company specifies, pursuant to Regulation 22 of the Uncertificated
Securities Regulations 2006 (SD No. 743/06), that only those members entered on the register of members as at 11:00 am on 19 May 2014
(or in the event that the meeting is adjourned, on the register of members 48 hours before the time of any adjourned meeting) shall be
entitled to attend or vote at the meeting in respect of the number of ordinary shares registered in their name at the time. Changes to
the register of members after 11:00am on 19 May 2014 (or, in the event that the meeting is adjourned, on the register of members less
than 48 hours before the time of any adjourned meeting) shall be disregarded in determining the rights of any person to attend or vote
at the meeting. (or in the event that the meeting is adjourned, on the register of members 48 hours before the time of any adjourned
meeting) shall be entitled to attend or vote at the meeting in respect of the number of ordinary shares registered in their name at the
time. Changes to the register of members after 11:00am on 19 May 2014 (or, in the event that the meeting is adjourned, on the register
of members less than 48 hours before the time of any adjourned meeting) shall be disregarded in determining the rights of any person
to attend or vote at the meeting.

ANNUAL REPORT & ACCOUNTS 2013COMPANY
INFORMATION

CORPORATE

Directors

Registered Office

Advisers

Auditors

Julian P. Telling
Non-Executive Chairman

Colin D. Porter
Chief Executive Officer

18 Athol Street
Douglas
Isle of Man IM1 1JA

T +44 (0)1624 626 242

Alan R. Kentish ACA ACII AIRM
Director of Product and Business
Development

Company Number
005398V

Michael R. Riddell CA
Non-Executive Director

Therese G. Neish BA(Hons) FCCA
Chief Financial Officer

Company Secretary
Elizabeth Anne Plummer
FCA TEP CTA

KPMG Audit LLC
Heritage Court
41 Athol Street
Douglas
Isle of Man IM99 1HN

Registrars and CREST
Service Provider
Computershare Investor Services
(Jersey) Limited
Queensway House Hilgrove Street
St Helier
Jersey JE1 1ES

Registered Agent
Greystone Trust
Company Limited
18 Athol Street Douglas
Isle of Man IM1 1JA

Nominated Adviser
and Broker
FinnCap
60 New Broad Street
London EC2M 1JJ

Solicitors to the Company
as to English law
Memery Crystal LLP
44 Southampton Buildings
London WC2A 1AP

Solicitors to the Company
as to Isle of Man law
Appleby’s
– Advocates & Notaries 33 Athol
Street, Douglas,
Isle of Man IM1 1LB

ANNUAL REPORT & ACCOUNTS 2013•
STM fiduciaire
3rd floor, WindWard House
la rouTe de la liBeraTion
sT Helier
Jersey JE2 3BQ
CHannel islands

T +44 (0)1534 837 600
f +44 (0)1534 837 601

www.stmfiduciaire.je
info@stmfiduciaire.je

•
STM fidecS
Po Box 575
monTagu Pavilion
8-10 QueensWay
giBralTar

T +350 200 42686
f +350 200 42701

www.stmfidecs.gi
info@stmfidecs.gi

•
STM MalTa
Tagliaferro Business CenTre
level 2, gaieTy lane
C/W HigH sTreeT
sliema, slm1549
malTa

T +356 213 33 211
f +356 213 33 220

www.stmmalta.com
info@stmmalta.com

•
STM cypruS
Kennedy ToWers flaT 14
elefTHeroPoleos sT., no. 1
1076 niCosia
CyPrus

•
STM nuMMoS
edif. soTovila, Plaza mayor
P. n. de guadiaro, soTogrande
11311 Cádiz
sPain

T +357 25336041
or +357 25336741

T +34 956 794 781
F +34 956 795 853

www.stmcyprus.com
info@stmcyprus.com

www.stmnummos.com
info@stmnummos.com

ANNUAL REPORT & ACCOUNTS
2013