STM shares plunge on profit warning

STM Group, which provides financial sevices to the rich and famous, has issued a profit warning after economic conditions made clients cut back on its products.

Revenue for the second half of 2011 is expected to be below management's expectations, prompting a big sell off of its shares, which pushed their value down 21%.

The group now anticipates that it will achieve ful year revenues of around £10m and profit before tax of approximately £750,000.

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"Given the relatively fixed cost base of the business, the fall in anticipated revenue will have a direct impact on the profitability of the business,"' the firm said in a statement to investors.

It blamed the fall in revenue on a general softening of transaction-based revenues generated in its core trust work.

"General economic uncertainty in the Eurozone has led to a reduced level of activity in the Gibraltar CTS business," it said.

CTS income currently accounts for 75% of the group's revenue and is split evenly between Jersey and Gibraltar.

The company said a number of initiatives in its STM Pensions and STM Life arms had been expected to contribute revenues in the fourth quarter of the year.

However it said that "frustatingly" revenues achieved had not as yet matched expectations.