STM Group joins AIM

STM Group PLC
28 March 2007


Press Release                                                      28 March 2007








                                 STM Group Plc



                             ('STM' or 'the Group')





                                 STM joins AIM



                      Acquisition of Fidecs Group Limited



STM Group Plc, the cross border financial services provider, today announces the
commencement of dealings of its Ordinary Shares on the AIM Market of the London
Stock Exchange.  It also announces the acquisition of Fidecs Group Limited
(Fidecs), a Gibraltar based corporate and trustee service provider (CTSP).
Daniel Stewart & Company Plc is acting as both Nominated Adviser and Broker to
the Company.  The stock market EPIC is STM.L.



Placing and Admission Statistics
Placing Price                                                                                            50p
Gross proceeds of the Placing                                                                   £7.5 million
Estimated net proceeds of the Placing receivable by the Company                                 £6.7 million
Cash consideration payable by the Company pursuant to the Acquisition                           £6.3 million
Number of Consideration Shares being issued pursuant to the Acquisition                           14,600,000
Number of new Ordinary Shares being issued pursuant to the Placing                                15,000,000
Number of Ordinary Shares in issue immediately following Admission                                35,200,000
Placing Shares as a percentage of the Enlarged Issued Share Capital                                    42.6%
Market capitalisation following the Placing at the Placing price                               £17.6 million



Reasons for Admission and use of proceeds



STM is seeking Admission for the following reasons: to raise finance to acquire
Fidecs and to enable it to offer quoted shares to the Vendors of Fidecs; to
facilitate the raising of finance, both equity and debt; to enable it to offer
quoted shares to the sellers of CTSPs, which is important given the Group's key
strategy of growth by acquisition; to raise the profile of the Company which
should assist in attracting potential acquisition targets; and to facilitate
incentivisation of key employees through the ability to grant awards over quoted
shares.



Fidecs, STM's first acquisition, (renamed today STM Fidecs Limited) is one of
the largest financial services firms in Gibraltar and employs some 88 people.
It specialises in financial planning both for HNWIs moving to work, live or
retire overseas or making cross-border investments, and for entrepreneurial,
predominantly owner-managed, businesses, expanding into or re-locating to other,
frequently lower tax, jurisdictions.  It also includes a specialist insurance
management division, that provides set up and management services to insurance
companies based in Gibraltar.



The Company intends to use the proceeds of the Placing, together with £2.0
million in bank borrowings, to pay the cash element of the acquisition price for
Fidecs, to repay Fidecs' existing borrowings and to pay the costs of the Placing
and Admission.



Tim Revill, Chief Executive Officer of STM Group Plc, said: 'We are delighted
that the flotation of the Group has been completed successfully and would like
to thank our new shareholders for their support and we look forward to working
with them.  They have recognised the potential of the fragmented CTSP market and
the operational, product and financial benefits of consolidation within it.
Having completed the acquisition of Fidecs, a market leader in the strategically
important foothold of Gibraltar, we look forward to pushing forward our buy and
build strategy in the broader CTSP markets.'



                                    - Ends -



For further information, please contact:
STM Group Plc
Tim Revill, Chief Executive                                                     Tel: [phone]
Matt Wood, Non-executive director                                               Tel: [phone]
                                                                                      www.stmgroupplc.com


Daniel Stewart & Co. Plc
Lindsay Mair/Stewart Dick/Chloe Ponsonby                                        Tel: [phone]




Media enquiries:
Abchurch
Henry Harrison-Topham / Charlie Jack                                            Tel: [phone]
[e-mail]                                                        www.abchurch-group.com



INTRODUCTION



STM has been formed as a strategic investment company specifically to build a
leading financial services group operating in the international corporate and
trustee service provider (CTSPs) sector.  This is expected to be achieved
through acquiring and consolidating high-quality existing CTSPs which offer
complementary products and services and that operate from complementary
jurisdictions to those provided by STM's first acquisition, Fidecs.



The Directors have considerable expertise both of the CTSP sector, and of
successfully integrating acquisitions, and believe that there is an opportunity
to build a significant group in the CTSP sector, due to a combination of
regulatory pressures, increasing compliance requirements, the market need for
more sophisticated products and services, and the pending retirement of owner
managers of many existing CTSPs.



The Company is seeking admission to AIM so that it can use quoted shares as a
currency for acquisitions and also to incentivise the Group's employees, through
an employee incentive scheme.



The traditional business of CTSPs is to administer and manage personal, family
and commercial assets and income streams in tax efficient jurisdictions.  The
economic factors for CTSPs include demand for more sophisticated tax planning,
particularly for high net worth individuals (HNWIs) and those approaching
retirement age, and the increased movement and migration of individuals, as
evidenced, for example, by the growth in the number of British expatriates
living in Southern Spain.



The CTSP market is fragmented in nature, comprising a small number of very large
international financial services groups and a large number of relatively small
trust and company management businesses regulated by, and operating out of,
single offshore jurisdictions.  Many of these smaller businesses are
owner-managed and whilst their owners often wish to continue to remain with
their businesses, they also want to plan for

their own retirement and succession.  The Directors believe that these factors
present an opportunity for consolidation.



STM's first acquisition, is of Fidecs Group Limited (renamed today STM Fidecs
Limited).  Founded in 1989 by STM's chief executive, Tim Revill, Fidecs operates
principally from Gibraltar and specialises in financial planning both for HNWIs
moving to work, live or retire overseas or making cross-border investments, and
for entrepreneurial, predominantly owner-managed, businesses, expanding into or
re-locating to other, frequently lower, tax jurisdictions.



Employing some 88 people, Fidecs is one of the largest CTSPs in Gibraltar.  It
is regulated by the Gibraltar Financial Services Commission and provides
traditional CTSP administration and management functions, but also has
successfully originated and grown a number of other key divisions, including an
insurance management division, specialising in providing set up and management
services to newly formed insurance companies operating out of Gibraltar.



Fidecs' annual revenue increased by approximately 33 per cent. from 2004 to 2006
and profit after tax increased by approximately 140 per cent. over the same
period.  In the year ended 31 December 2006, Fidecs reported audited revenues of
£5.0 million and a profit after tax of £1.7 million.





INFORMATION ON STM

Background



STM became a wholly owned subsidiary of Equity Special Situations plc ('ESS') in
2006, with a view to becoming a leading provider of international trust and
company management services through a 'buy and build' strategy.  ESS is a
strategic investment company whose shares are traded on AIM, which creates or
acquires significant minority shareholdings in financial services businesses for
long term capital growth. ESS has a track record in the financial services
sector having created, and organised the AIM flotation of, Syndicate Asset
Management plc ('SAM') in 2005.  Since then, SAM has made seven acquisitions in
the fund management sector and now has total funds under management of £5.5
billion.  ESS has supported SAM financially in each of its acquisitions since
its IPO and is now a long term passive shareholder in SAM.



Following almost twelve months of extensive research into the CTSP sector, ESS
incorporated and registered STM in the Isle of Man.  Having arranged the seed
capital finance for STM, ESS is also investing £2.2 million as part of the
Placing, as well as providing the New Loan Facility to the Company.  Following
Admission, ESS will retain a shareholding of 20.0 per cent. in STM, which will
be subject to the terms of a Lock-up Agreement.



Acquisition strategy

STM's strategy is to build an international group of CTSPs operating from a
number of complementary tax efficient jurisdictions with each offering its
clients high quality products and services.  The Directors have outlined three
initial principal criteria to be applied when assessing the suitability of an
acquisition target, although these criteria are not intended to be exhaustive.
The Directors will seek to acquire CTSPs which:


  •       bring to the Group a licence to conduct trust and company management business in a complementary
          jurisdiction to that of the existing Group; and/or
  •       provide the Group with complementary financial products or services which can be sold across the
          Group; and/or
  •       have portfolios of clients which can easily be integrated within an existing Group company, thus
          eliminating one set of fixed overheads (business process systems, compliance, finance and accounts,
          marketing etc). A high proportion of operating costs of CTSPs are fixed.



It is intended that potential acquisition targets will be subject to extensive
due diligence, with a focus on quality of service and compliance and each will
be required to adhere to Group-wide standards following acquisition.  STM
believes that its senior staff, following the acquisition of Fidecs, have the
knowledge and experience necessary to undertake due diligence on target
businesses.  The Group will operate a separately identifiable acquisitions and
integration division with effect from Admission.





STM's acquisitions are likely to include CTSPs operating in a different
jurisdiction to Fidecs, and one that is able to continue to provide zero-tax
entities to its clients.  This could allow Fidecs to refer clients who require
the setting up of a zero-tax entity to another member of the group, rather than
to third party CTSPs (as at 31 December 2006, Fidecs administered approximately
300 entities incorporated outside Gibraltar).  It is intended that Tim Revill,
CEO of STM, will oversee the identification of, and be closely involved in the
negotiations with, potential targets.



Integration

STM's strategy will be to retain the existing branding of one dominant
STM-branded operation in each jurisdiction (with the addition of the STM acronym
to the local name), the first of which will be STM Fidecs in Gibraltar.  The
Directors expect that, over time, STM Fidecs will acquire other CTSPs operating
in Gibraltar.  Although clients of CTSPs are, by the nature of the business,
loyal (the typical average lifecycle of one of Fidecs' trusts is approximately
ten years), the Directors believe that securing the goodwill of the staff and
creating minimum disturbance to the existing business relationships between the
client and the CTSP will assist in ensuring that the staff and underlying client
remain with Group.



Following Admission, STM will retain a separately identifiable integration team,
who will be responsible for undertaking the integration of the acquired
businesses and, accordingly, the Company expects to recruit a suitably
experienced manager for this team before the end of 2007.



THE CTSP MARKET



The CTSP sector is very fragmented, with many providers being owner-managed
businesses.  The number of licensed company managers/fiduciaries in a selection
of offshore centres is, according to the website of the relevant regulatory
authority, as follows: BVI 99, Gibraltar 81, Guernsey 144, and Isle of Man 163.
 Whilst some of these entities are part of international groups, a number
operate from a single office in their respective finance centres.  As clients
often need a range of services and products (e.g. access to a double tax treaty
network), all of which are not available in one location, a CTSP must have
access to a network of other jurisdictions and providers, whose professional
standards and ethics can be relied on.



INFORMATION ON FIDECS



History of Fidecs

Tim Revill, STM's Chief Executive, established Fidecs in 1989, to acquire Fidecs
Consulting SA from Fidecs' then parent company by way of a management buy out.
Following the management buy out, Fidecs began trading in Gibraltar in 1990 and
grew steadily with the introduction of new business lines and in July 1996
became the Gibraltar member firm of BDO International.  Since 1996, Fidecs'
management has successfully acquired and integrated two companies and has
broadened its product offering considerably.



Fidecs Group Limited which, on 13 March 2007, redomiciled from Luxembourg to
Isle of Man has its main operational office in Gibraltar and it has a second
office on the south coast of Spain in Sotogrande, Cadiz Province.  Fidecs'
client base has been almost exclusively based in the United Kingdom, but in
order to address other European markets, Fidecs has started actively to recruit
staff with broader European language skills.



Fidecs' primary business is trust and company management, a sector which has
continued to grow in Gibraltar, a jurisdiction which has pioneered the
supervision and regulation of professional trusteeship and company management
service procedures. Fidecs' insurance management business, FIM, which was set up
in 1997 by STM's Chief Financial Officer, Alan Kentish, is now only slightly
smaller than its trust and company management business.  FIM currently has 15
insurance companies to which it provides management and administrative services.



Fidecs' operations and revenue model

Fidecs has grown both organically and through a number of carefully selected
acquisitions, each financed from retained earnings.  Fidecs' operations can be
categorised into four principal divisions, with each division being made up of a
number of 'sister' operating companies.  The total turnover of each division in
the year ended 31 December 2006 is shown in the table below, identified by each
division's principal trading company:


                                                                                   2006          % of 2006

                                                                                revenue            revenue
                                                                                (£'000)
Fidecs Management Limited ('FML')                                                 2,395               48.2
Fidecs Insurance Management ('FIM')                                               1,705               34.3
Fidecs Advisory Limited ('FAL')                                                     338                6.8
Nummos Profesional S.L. ('Nummos')                                                  205                4.1
Other                                                                               327                6.6
                                                                                  4,970              100.0



FML

FML currently provides offshore trust and company management services to more
than 375 offshore trusts and more than 550 companies.  The services it provides
include day to day administration and cash management, the provision of
directors, company secretarial functions, accounts preparation work, the
completion of annual returns. Assets administered by FML include cash, quoted
shares and bonds, residential and development property and holdings in private
companies.



FIM

FIM is Fidecs' insurance company management division.  The Directors believe
there to be approximately 50 insurance companies based in Gibraltar and
regulated by the GFSC. Gibraltar is attractive to them for a number of reasons
including speed of approval (compared with, for example, the UK), lower solvency
requirements (thus enhancing return on capital) and Gibraltar's low corporation
tax rates.  Consequently, many of these companies prefer to outsource the
establishment, regulatory approval process and ongoing management, compliance
and infrastructure functions to Gibraltar based insurance management entities
such as FIM which are familiar with the regulatory process, and have expertise
and contacts to expedite the process.  FIM provides insurance management
services to 15 insurance companies in Gibraltar and undertakes insurance company
applications on behalf of new Gibraltar insurance companies.  FIM provides a
complete management service from business plan, through licensing to
underwriting support, financial reporting and the administration of reserves.



FAL

FAL was established in March 2004 and offers cross border tax planning solutions
to corporates and individuals.  The business is project fee based. FAL completed
179 assignments in 2006 of which a negligible amount of business was referred by
BDO.



Nummos

Nummos, Fidecs' Spanish office, is located in Sotogrande, Cadiz Province and
provides legal, accountancy and taxation services, primarily to British
expatriates who have moved to Spain or own property on the Costa del Sol.  In
April 2006, Fidecs reacquired the 67 per cent. shareholding in Nummos which it
had previously sold to BDO network's International's Spanish member firm, taking
its interest to 100 per cent.  Since then, Fidecs' management team has sought to
re-establish Nummos as a Fidecs operated entity and they expect Nummos to return
to profitability in 2007.



Historic trading

The Table below sets out a summary of financial information on Fidecs for the
three years ended 31 December 2006.
                                                   Year ended            Year ended            Year ended

                                                  31 December           31 December           31 December

                                                         2004                  2005                  2006

                                                        £'000                 £'000                 £'000

Revenue                                                 3,719                 4,847                 4,970
Operating Profit                                          617                 1,662                 1,620
Profit after Tax                                          690                 1,710                 1,661



STRENGTHS OF THE GROUP

The Directors consider that the Group has the following key strengths:
  •       it has high earnings visibility, with long term, loyal clients;

  •       it is an established business with a strong track record of profitability and cash generation;

  •       it operates in a growing sector, which has a strong rationale for consolidation; and

  •       it has an experienced and highly-regarded management team with sector and consolidation expertise.




COMPETITION

Over the past ten years, a small number of independent (i.e. non bank) CTSPs
have successfully built multijurisdictional networks, through organic growth as
well as acquisitions. International CTSPs fall into three categories:


  •       bank owned: CITCO Limited, Fortis, Investec Plc;

  •       independent: Equity Trust Limited, Trident Trust Company Limited, Sovereign Trust, Jordans
          International Limited and IFG Group Plc; and
  •       law firm owned: Maples & Calder, Appleby Hunter Bailhache, Ogier.




The law firms are comparatively new entrants to the international sector,
replacing some accountancy firms, who are facing regulatory pressures to exit
for reasons of independence.



The Directors believe that success is dependent on increasing and maintaining
sources of client referrals.  This relies on improving quality of service, which
increasingly relies on the use of IT, without losing the personal touch.  It is
for this reason that smaller CTSPs, who are not adequately resourced, are losing
ground.



DIRECTORS AND EMPLOYEES

On Admission, the Board will comprise six directors, brief details of whom are
summarised below, with further details in the Admission document.



Bernard Gallagher ACMA, aged 54 (Non-Executive Chairman)

Bernard is currently finance director of Premier Research Group plc ('PRG'), and
was its finance director on its admission to AIM in December 2004.  PRG provides
outsourced clinical testing services and has grown organically and by
acquisition.  Since it joined AIM, PRG has undertaken major acquisitions all of
which have been successfully integrated, and its market capitalisation has grown
from £16 million to more than £145 million.  Bernard has considerable experience
of making and then integrating acquisitions and has over 22 years of experience
of financial management in a variety of businesses. He is an Associate of the
Chartered Institute of Management Accountants.



Timothy John Revill FCA TEP, aged 56 (Chief Executive Officer)

Tim is the founder of Fidecs.  He qualified as a chartered accountant in 1975
with PKF in London and then moved to their Isle of Man office.  In 1978, he
established his own professional practice in the Isle of Man and subsequently
merged it with another firm.  In 1982, he moved to Gibraltar to open the
Gibraltar and Spanish offices of his partnership, which he ran until 1989, when
he participated in a management buy-out of the Spanish office and established
Fidecs.  Tim specialises in international financial and tax planning and until
2006 was a member of the BDO Tax Steering Committee and continues to be a member
of the BDO Tax Knowledge Sharing Centre of Excellence.  Part of Tim's role as
CEO of STM will be to manage the acquisition process, including the
identification of suitable targets.  Tim is currently a director of Newcastle
United Plc and Stan James (Gibraltar) Ltd.



Alan Roy Kentish ACA ACII AIRM, aged 41 (Chief Financial Officer)

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 acts as managing and technical director
of FIM, which has experienced considerable growth over the last three years and
is recognised as the largest insurance manager in Gibraltar.  In addition, Alan
acts as the CEO of the Fidecs Group.  Alan sits on the boards of a number of
insurance companies, including Admiral Insurance Company (Gibraltar) Limited.



Mark William Denton, aged 45 (Non-Executive Director)

Mark is the managing director of Fortis Intertrust (IOM) Ltd, a company where he
has worked for over 18 years and in this time has been responsible for a number
of key areas including client services, compliance, operations and human
resources.  Mark took over the role of managing director on 1 January 2007.



Martin James Derbyshire, aged 39 (Non-Executive Director)

Martin is the director of Client Services in the Isle of Man Office of Fortis
Intertrust (IOM) Limited which he joined in 1994, initially working as an
accountant, providing book keeping, accounting and taxation services to the
international client base of the trust and company administration teams.  In
1998 he moved to a role as a direct client relationship manager, providing
structuring, company administration, advisory, management and directorship
services to entities established for corporate and private clients.



Matthew Graham Wood ACA, aged 33 (Non-Executive Director)

Matt graduated with a First Class honours degree in Economics in 1996 from the
University of Wales and qualified as a chartered accountant in 1999.  He
subsequently joined the corporate finance department of Beeson Gregory Limited
(now Evolution Securities) in 2000 where he advised growing companies on
transactions including IPOs, secondary fundraisings, mergers and acquisitions
and corporate restructuring.  Matt also advised corporate clients on the UK
regulatory framework including the Listing Rules of the UKLA, the AIM Rules, the
Code and general corporate governance matters.  He left Evolution Securities in
April 2006 to become a director of, and a consultant to, a number of private and
public companies, including AIM quoted Equity Special Situations Limited and
Avarae Global Coins plc.



                                    - Ends -




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