The observation is made in the annual report of AIM market listed specialist company and trust services provider, STM Group.
The group, which has operations in Gibraltar, Malta, Switzerland, Spain and Cyprus as well as Jersey, said that activity from wealthy non-domiciled individuals investing into the UK market through the Island had dropped in 2012.
In his report to shareholders, chief executive Colin Porter said: ‘The jurisdiction has generally seen a downturn in activity as a result of pressure by the UK government to extract more tax from this profile of individual.’
Read more in Thursday’s JEP
The Jersey division of publicly-listed listed financial services group STM had a difficult 2012.
Overall the business saw growth in revenue and profits but that was not the case at STM in Jersey.
The revenue generated from the Island for the group’s core company and trust services business fell by £300,000 to £3.4 million.
Mr Porter said that this was business primarily derived from non-domiciled individuals investing into the UK.
However, the company also had to contend with what was described as a ‘regulatory issue’ during the year.
The company report said that the firm’s head of group risk assessed the issue within three days of it coming to their attention and a rehabilitation plan endorsed by the Jersey Financial Services was implemented.
However, Mr Porter said that the issue impacted on management time and the division’s ability to generate fee income.
‘While the regulatory issue has been resolved to the satisfaction of all parties, we estimate that the resultant changes to the management team and loss of time cost the business in excess of £300,000 in income,’ he said.
The STM Jersey business has 35 staff and is based in Windward House in Route de la Libération.
In relatively recent years it has acquired three Jersey businesses as it sought to expand. It bought Zenith Trust in 2009 and Compagnie Fiduciare and St George’s Financial Services in 2008.
Overall, the group saw an increase in revenue to £11.6 million in 2012 from £9.6 million the previous year.
Its profits grew to £1 million from £700,000 while its cash improved slightly to £3.4 million from £3.3 million.
The firm reported that its pensions division had ‘come of age’, with substantially increased revenue £3.6 million, which was up from £600,000 in 2011.
The business reported that it also benefitted from the building of distribution networks that helped to deliver new products in new markets,
Coupled with a good start to 2013, it further acted to diversify away from the difficult trading conditions in its core company and trust services division.
However, that CTS division based in Jersey and Gibraltar still contributed 77% of group revenue at £6.5 million, which was down by £1million on 2011.
Mr Porter said that the economic climate in 2012 had been widely recognised as challenging for those operating in pan-European markets.
‘STM has taken proactive steps to address these challenges and to build a robust business,’ he said.
