20 June 2024
XPS Pensions Group
plc
Final
results for the year ended 31 March 2024
Another year of record
growth
XPS Pensions Group plc ("XPS" or the
"Group"), the leading Pensions Consulting and Administration
business, is pleased to announce its audited full year
results for the year ended 31 March 2024
("FY 2024").
|
Adjusted and excluding
NPT(1)
|
As reported
|
|
FY 2024
|
FY 2023
|
Change YoY
|
FY 2024
|
FY 2023
|
Change YoY
|
Pensions Actuarial and
Consulting
|
£93.4m
|
£77.4m
|
21%
|
£93.4m
|
£77.4m
|
21%
|
Pensions Investment
Consulting
|
£20.3m
|
£18.0m
|
13%
|
£20.3m
|
£18.0m
|
13%
|
Total Advisory
|
£113.7m
|
£95.4m
|
19%
|
£113.7m
|
£95.4m
|
19%
|
Pensions Administration
|
£71.9m
|
£57.5m
|
25%
|
£71.9m
|
£57.5m
|
25%
|
SIP
|
£11.0m
|
£9.4m
|
17%
|
£11.0m
|
£9.4m
|
17%
|
Total Group Revenue (excl. NPT)
|
£196.6m
|
£162.3m
|
21%
|
£196.6m
|
£162.3m
|
21%
|
NPT(1)
|
-
|
-
|
-
|
£2.8m
|
£4.3m
|
(35%)
|
Total Group Revenue
|
£196.6m
|
£162.3m
|
21%
|
£199.4m
|
£166.6m
|
20%
|
EBITDA
|
£54.8m
|
£41.4m
|
32%
|
£79.8m
|
£35.1m
|
127%
|
Profit before
tax(2)
|
£44.5m
|
£32.4m
|
37%
|
£62.5m
|
£19.1m
|
227%
|
Earnings per share
|
10.3p
|
7.4p
|
39%
|
26.2p
|
7.7p
|
240%
|
Fully Diluted EPS(1)
|
15.1p
|
12.2p
|
24%
|
24.7p
|
7.3p
|
238%
|
Net
debt
|
£14.0m
|
£55.3m
|
75%
|
£14.0m
|
£55.3m
|
75%
|
Total dividends per share
|
10.0p
|
8.4p
|
19%
|
10.0p
|
8.4p
|
19%
|
(1)
Adjusted measures exclude the impact of
acquisition related amortisation, share based payments, exceptional
costs and the fair value adjustment to contingent consideration.
They also exclude the results of the NPT business which was sold in
November 2023.
(2)
Statutory/as reported profit before tax includes
the gain on disposal of the NPT business. The net gain on the
disposal of the NPT business during the year was £32.5
million.
· Strong
client demand and inflationary fee increases drove 21% growth in
Group revenues to £196.6 million
· Operational gearing continuing to improve with adjusted EBITDA
(1) up 32% YoY, with margin increasing to 27.9% from
25.5% last year
· Pensions Actuarial Consulting grew 21% and Pensions Investment
Consulting grew 13% driven by strong client demand due to continued
market and regulatory changes, alongside inflationary fee
increases
· Pensions Administration revenue grew 25% YoY driven by new
client wins, inflationary fee increases and increased levels of
project work in areas such as GMP and the McCloud
remedy.
· SIP
revenues up 17% with strong underlying sales, and increases in
commission tracking the bank base rate
· The
National Pension Trust (NPT) was sold in November 2023 to SEI for
an initial cash consideration of £35.0 million, with the Group
simultaneously entering into a long-term contract to provide
services to SEI
· Strong
balance sheet supported by highly cash generative platform -
operating cash-flow conversion of 104% (FY 2023: 99%)
· Net
debt/adjusted EBITDA(1) substantially reduced to 0.27x
at 31 March 2024 (31 March 2023: 1.38x)
· Statutory profit before tax up 227% YoY. Excluding the impact
of the NPT disposal, statutory profit before tax was up
57%
· Adjusted diluted EPS(1) up 24% YoY to 15.1p despite
the increase in corporation tax rate from 19% to 25%
· Continuing with progressive dividend policy - proposed final
dividend of 7.0p resulting in total dividends for the year of 10.0p
up 19% YoY
DELIVERING ON OUR GROWTH STRATEGY:
· Seventh consecutive year of revenue growth since listing in
2017 - performance underscores the non-cyclical, predictable and
resilient nature of the business with an established brand, and the
benefits of investments made in services in prior years
· Continued success in the first-time administration outsourcing
market with the landmark appointment to the John Lewis Partnership
pension scheme
· Our
proprietary administration platform Aurora delivered on time and on
budget with first new large client onboarded. Aurora is also
driving success in winning new appointments
· Strong
brand, enhanced by further multiple industry awards -
'Third Party Administrator of the Year',
'Fiduciary Evaluator of the Year' and 'Diversity and Inclusion
Excellence Award'
· Strong
employee-centric culture, with an employee net promoter score of
+31, and named in the Sunday Times "Best Places to Work"
· Continued focus on sustainability within the business, notable
milestones achieved:
o Reduced our own emissions and remained fully carbon neutral
for the third year in a row (scope 1, 2 and 3 emissions)
o Retained signatory to the FRC's Stewardship Code
Paul Cuff, Co-CEO of XPS Pensions Group,
commented:
"We are delighted to announce another year of record growth,
encompassing multiple financial upgrades during the period.
Our prior year was strong too, so to carry on our positive momentum
and achieve total group revenue growth of 21% is really
pleasing. It is also great that this was achieved with double
digit growth in every one of our core divisions - actuarial,
investment consulting, administration, and our SIP
business.
We
have seen continued growth in areas that we have invested in, such
as our risk transfer team, and in services that we provide directly
to insurers. We have also enjoyed playing an active role in
the debate about the future of our industry in the new age of
better funded defined benefit schemes; we look forward to
continuing to advise our clients on the full range of strategic
options available to them against the backdrop of changing
regulations that are coming their way.
Earlier this month, we were delighted to learn that XPS will
be joining the FTSE 250. It is a very proud milestone for us,
achieved through the hard work of our colleagues and the support of
our clients and shareholders. There is much yet to come and
we remain very excited about the next stage of our
journey.
Ben
Bramhall, Co-CEO of XPS Pensions Group,
commented:
"The delivery of our new administration platform, Aurora, was
a big milestone for our Pensions Administration business. It
was delivered on time and on budget and is now live, and we
continue to invest in the platform and to transition clients on to
it. We are excited as Aurora is truly cutting edge and will
deliver a better experience for our clients and their members, and
it has already been instrumental in new business
success.
We
remain a truly employee-centric organisation and were very proud of
our employee survey results in the year, where for the second year
in a row we achieved an employee net promotor score of over +30. We
also won a UK Company Culture Award for the best diversity,
equality and inclusion initiative.
Our culture is set by everyone at our firm, and we would like
to thank all of our people for the way they look after each other
and our clients. We are proud of what everyone has achieved
in what has been a brilliant year for
XPS."
Outlook
The regulatory and market drivers
behind our dependable business model remain in place. The scale and
reputation we have built in our markets, the thought leadership we
provide on regulatory issues and the proprietary technologies and
solutions we have developed, position us well to capitalise on the
long-term opportunities in front of us. We have seen continued
strong demand of our services since the beginning of the year and
maintain an active new business pipeline. We have
continued to grow market share, but with this still under 10% there
is considerable scope for us to grow further.
The increasing overlap between the
pensions and insurance industries through bulk annuities as well as
broader life insurance opportunities offer further meaningful
avenues of growth. To better reflect the
growing overlap between the pensions and insurance industries and
the expanding opportunity set ahead of us, we are making a small
change to our brand identity to trade as XPS
Group*.
We are proud to be joining the FTSE
250 effective from 24 June which is a significant milestone for XPS
and is a testament to the hard work of our colleagues and the
backing of our clients and shareholders.
The strong momentum from FY 2024 has
continued into the new financial year and we remain confident in
delivering against our expectations for the current
year.
* No change to our legal registered company
name.
-Ends-
For
further information, contact:
XPS
Pensions Group
|
|
Snehal Shah
Chief Financial Officer
|
+44 (0)20 3978 8626
|
Canaccord Genuity (Joint Broker)
|
+44 (0)20 7523 8000
|
Adam James
|
|
Alex Orr
|
|
RBC
Capital Markets (Joint Broker)
|
+44 (0)20 7653 4000
|
James Agnew
|
|
Jamil Miah
|
|
Media Enquiries:
|
|
Camarco
|
|
Gordon Poole
|
+44 (0)20 3757 4997
|
Rosie Driscoll
|
+44 (0)20 3757 4981
|
Notes to Editors:
XPS Pensions Group is a leading
pension consulting and administration business focused on UK
pension schemes. XPS combines expertise, insight and technology to
address the needs of over 1,400 pension schemes and their
sponsoring employers on an ongoing and project basis. We undertake
pensions administration for over one million members and provide
advisory services to schemes and corporate sponsors in respect of
schemes of all sizes, including 88 with assets over
£1bn.
Forward Looking Statements
This announcement may include
statements that are forward looking in nature. Forward looking
statements involve known and unknown risks, assumptions,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Group to be materially different
from any future results, performance or achievements expressed or
implied by such forward looking statements. These forward-looking
statements are made only as at the date of this announcement.
Nothing in this announcement should be construed as a profit
forecast. Except as required by the Listing Rules and applicable
law, the Group undertakes no obligation to update, revise or change
any forward-looking statements to reflect events or developments
occurring after the date such statements are published.
Co-Chief Executives' review
Growing track record
Our last Annual Report, for the year
ended 31 March 2023, set out a tremendous set of results - a record
year for the Group, delivering strong revenue growth with
operational gearing coming through. With this we had
delivered revenue growth in every year since we listed in 2017, in
turn building on a much longer track record of continuous growth
before that. This growth is set against a wide range of
macro/geopolitical backdrops: macro - from the low-to-near-zero
interest rates and inflation when we listed to the high rates and
prices of today; and geopolitical - Brexit, the pandemic and
conflict in Europe. To have delivered uninterrupted revenue growth
throughout was, in our view, testament to the dependable nature of
the pensions markets in which we operate, the resilience of our
business model and the excellence and commitment of our
people.
The question was; how to follow our
best year? The answer was to go one better still, and this latest
12-month period is a stand-out in its own right. Growth at the
revenue level has been strong across the board. All four main
divisions (Pensions Actuarial & Consulting; Pensions Investment
Consulting; Pensions Administration; and SIP) have recorded
double-digit top-line growth. Typically, in any given year, one
division outperforms. This year, the investment we
have made in our services, together with the significant regulatory
and structurally driven end market activity, has delivered uniform
growth which has also been boosted by the headline level of
inflation flowing through to our fees. That same combination
also lies behind a second consecutive year of improved operational
gearing for the Group, with an accelerating trend of earnings
growing faster than revenues. Not only are we growing our revenues,
but our profitability too, and we are continuing to grow
sustainably. FY 2024 is the third successive year that we have been
carbon neutral. It is also the second consecutive year that we have
achieved an employee Net Promoter Score (eNPS) of more than 30, a
level viewed as exceptional for professional services businesses.
We were also named one of the Best Places to Work 2023 by The
Sunday Times. As well as monitoring employee engagement and
wellbeing, the survey tracked the best places to work for women,
members of the LGBTQIA+ community, disabled employees, ethnic
minorities and younger and older workers.
Growing profitability
Total Group revenues of £199.4
million for FY 2024 represent a 20% increase on FY 2023's £166.6
million. Excluding NPT, Group revenues were £196.6 million (FY
2023: £162.3 million), representing an increase of 21%. This
is the second year in a row that total revenues have grown by 20% -
previously, annual growth had been in the mid-to-high single
digits. We view this step change in growth as a product of the
high-inflationary environment and strong end markets. We also
believe we are reaping the benefits of the investments we have made
over the years in our technology, resources and platform. We have
built up our capabilities across all of our key service areas so
that the increased breadth and scale of our offering allows us to
deliver an ever-expanding set of solutions to our clients. It also
enables us to win new mandates on pension schemes of significant
size, such as the John Lewis Partnership (JLP) Scheme, which was
awarded to us during the year. The high proportion of organic
revenue growth (19%) is further evidence that the investment in our
internal capabilities is bearing fruit (the remaining growth arose
from last year's Penfida acquisition).
In addition, this is the second
successive year that the Group has benefited from operational
gearing, whereby earnings growth has outpaced that of revenues - FY
2024 adjusted EBITDA excluding the NPT business sold in November
2023 grew 32% to £54.8 million (FY 2023 on a comparable basis:
£41.4 million); statutory profit before tax increased 227% to £62.5
million (FY 2023: £19.1 million) on the back of strong operational
performance as well as the gain on disposal of the NPT business;
and adjusted diluted EPS grew 21% year on year to 15.3p in FY 2024
(FY 2023: 12.6p). Excluding the NPT business, the equivalent
adjusted fully diluted EPS grew by 24% to 15.1p in FY 2024 (FY
2023: 12.2p). This latter measure is suppressed by the increase in
corporation tax. As with revenues, earnings are benefiting
from the investments we have made into our platform and
capabilities. We expect this to continue in the years
ahead.
In terms of balance sheet, following
the sale of NPT during the year for an initial cash consideration
of £35 million, a significant portion of the Group's existing debt
facilities has been repaid. Having low debt gives us additional
flexibility to invest further in the business, both organically and
inorganically. Under the terms of the NPT sale, contingent
consideration of up to £7.5 million may be paid to the Group,
subject to business performance over the two years following
completion.
Based on the strength of our
financial performance and our balance sheet, we are proposing a 19%
increase in the total full-year dividend for the year in line with
our progressive dividend policy.
As mentioned earlier, growth at the
divisional level has been across all areas of the business posting
double-digit increases in full-year revenues: Pensions Actuarial
& Consulting up 21% to £93.4 million (FY 2023: £77.4 million);
Pensions Investment Consulting up 13% to £20.3 million (FY 2023:
£18.0 million); Pensions Administration up 25% to £71.9 million (FY
2023: £57.5 million); and SIP up 17% to £11.0 million (FY 2023:
£9.4 million). All of our divisions have benefited from contractual
fee increases in line with various inflationary measures.
Specific drivers of growth beyond this are:
Pensions Actuarial &
Consulting: the switch from a low to
a high interest rate/inflationary environment has driven a need for
advice. Clients require guidance on how best to navigate the new
macro backdrop and reset their strategies accordingly. In some
cases, this has involved de-risking, fuelling further strong growth
in risk transfer revenues. De-risking activity also continues to
generate work directly for insurance companies as they take on
pension scheme liabilities.
Pensions Investment
Consulting: further tailwinds were
experienced from the autumn 2022 gilt market crisis, leading to
strong demand for portfolio rebalancing work and hedging strategy
reviews as well as new mandates for independent oversight of
fiduciary managers.
Pensions
Administration: several new client
wins late in the previous financial year came on stream during this
year and increased the number of members under administration to
1.1 million. During the year we won John Lewis Partnership (JLP)
with approximately 165,000 members, a new client that will
transition between now and 2025. This win represents a major
endorsement of both our offering and our new Aurora platform which
we launched during the year on time and on budget. Aurora is a
cloud-based proprietary system that drives efficiencies, further
bolsters security and provides clients and members with enhanced
online access.
We also won work in the public sector
including a one-off project to support schemes to implement the
McCloud judgement on behalf of approximately 32,000 members. We
have assigned material resources to this project to ensure we meet
the 2025 delivery target.
SIP: strong organic growth and a full-year contribution from our
inclusion on the panel of recommended SIPP providers for St James'
Place, one of the UK's leading financial advisers, have both been
tailwinds. So too has the high bank base rate as, in line with
standard industry practice, our SIP business is paid in part
through interest generated from client deposits, although we have
elected to cap this at a level that is currently well below
prevailing rates and caps our peers typically have in
place.
National Pensions Trust
(NPT): following the November 2023
sale of NPT to SEI, a best-of-breed service provider, we continue
to provide a wide range of services to both NPT and SEI. The
rationale behind the sale is to create a market-leading master
trust for the benefit of clients and members. Under the strategic
partnership with SEI, we will continue to provide pensions
administration and consultancy services.
Growing markets
Our end markets are large, growing,
predictable and, as our long track record of revenue growth
demonstrates, non-cyclical. This is primarily due to the presence
of two key structural drivers.
Ongoing regulatory change:
recent years have seen much activity on the regulatory front
including the Pension Schemes Act 2021, which focuses on how
corporates finance their arrangements and how schemes are treated
following M&A; the 2018 GMP equalisation ruling that trustees
must correct the unequal treatment of men and women in relation to
elements of defined benefit schemes that built up in the 1980s/90s;
and the CMA Review which recommended schemes seek independent
advice about fund managers engaged on a fiduciary management basis.
Further change is on the horizon, including a new Funding Code due
no later than September 2024, which may have quite a profound
impact on how pension schemes operate.
Changes to rules and regulations
governing pension schemes have a lasting effect. Often bespoke
advice is required to understand how changes affect individual
schemes with the significant flows of business generated tending to
run for several years. Furthermore, as the regulatory landscape
gets more complex, in-house schemes can be open to outsourcing
administration to specialist partners such as us.
Ongoing market-driven change:
similar to regulation, when there is lasting change in financial
markets, clients require advice on how best to navigate the new
environment. The fundamental shift from low to high
interest/inflation rates has largely been positive for pensions
schemes - the aggregate funding level across all UK defined benefit
schemes has improved by c. 20% over the last 2 years. As schemes
look to lock in their surpluses and/or consider their options,
demand for the services we provide, such as de-risking, rises. The
number of schemes in the pensions eco-system is declining as they
transfer out their liabilities to insurers but it's a gradual
headwind for the industry and it continues to create a surge in
demand for de-risking advice.
The bulk annuities market is one area
that is benefiting from the move by pension schemes to de-risk and
offload liabilities - bulk annuity transaction volumes are
currently between £50-60 billion a year, compared to £30-40 billion
previously. As de-risking via bulk annuities or other insurance
solutions increases, so too does the overlap between the pensions
and insurance industries. Like all pension scheme clients, insurers
need best-in-class advice and solutions. Working with insurance
companies is therefore a long-term growth opportunity for the
business.
As the above demonstrates, there is
no shortage of growth opportunities to go for within our markets.
To maximise the opportunity set before us, we have in place four
core strategic pillars.
Regulatory change as a driver of
activity: by providing thought
leadership, XPS is often at the heart of the regulatory debate and
therefore well placed to offer up-to-date guidance and advice. This
year, we have been involved in discussions with the Pensions
Regulator, the UK Government, HM Treasury and the Institute for
Fiscal Studies on how to drive greater investment of pension scheme
assets into productive finance. Our research proposal "How DB pension schemes can support UK growth
and protect members" sets out how regulations and a code of
practice could deliver £100 billion in surplus to benefit members
and the economy. While discussions on our straightforward and safe
approach continue, we are already helping schemes benefit now and
are building relationships with sponsors of large schemes (£1
billion plus) with which we are exploring run-on for their DB
pensions.
Growing market share: the
overall fee market stands at over £2.5 billion and has historically
grown 3-4% per year, although, recently, this rate has picked up
due to inflation and elevated levels of regulatory and market
change. Based on full-year revenues of £199.4 million, our market
share stands at 8%. Considerable scope remains for us to increase
this and, as our 21% revenue growth for the year shows, this is
what we are doing.
Growth through expanding services: the increasing overlap between the pensions and insurance
industries as well as broader life insurance opportunities outside
of bulk annuities offer clear avenues of growth. To capture this,
we need to ensure we have a continually expanding offering.
Technology plays a key role here both in terms of maximising the
commercial value of our proprietary solutions in new ways and in
developing new platforms.
The year under review saw us pioneer
the use of AI in our industry. Our AI Driven Actuary (AIDA) tool
revolutionises the assessment of member options for pension schemes
by quickly analysing large volumes of members' data and providing
clear information on which members are eligible for, and likely to
engage with and benefit from, member options. The tool simplifies
and accelerates the process for clients and trustees and allows
action to be taken at speed when needed, either on buy-out or more
generally to ensure fairness to members as market conditions
change. Because it can be used by schemes of all sizes, AIDA helps
trustees give more choice to all members.
Partnerships are another route to
capturing market-driven growth. In line with this, we have been
working with one of the leading UK bulk annuity providers to create
a solution that enables small pension schemes to access insurance
solutions efficiently. This will involve us providing wide
ranging support - including pricing, transition and administration
services.
The partnership serves as another
demonstration of the growing overlap between the pensions and
insurance industries and with it the expanding opportunity set
before us. To better reflect our growing
overlap between the pensions and insurance industries and the
expanding opportunity set ahead of us, we are making a small change
to our brand identity to trade as XPS Group. There will be no
change to our legal registered company name.
Growth through M&A:
alongside the range of organic growth opportunities, we have a
successful track record of identifying, acquiring and integrating
businesses. We look at potential M&A opportunities that meet
our investment criteria and strategic objectives as and when they
arise. As our sub10% market share demonstrates, however, we have
plenty of organic growth to go for. As we expand our services
in tangential markets such as insurance consulting, the M&A
landscape stretches beyond the pensions advisory and administration
space.
Growing sustainably
Growing track record, growing
profitability, growing markets - all are key to the XPS investment
case. So too is growing sustainably. By growing sustainably, we can
secure the long-term future of the Group.
To grow sustainably, we need to
safeguard the wellbeing of our people and our
environment.
People: the year under review
saw the number of our people grow by more than 100 to over
1,700.
We are proud of all our people for
the contributions they have made to the success of the Group over
the years and to the record set of results we are reporting today.
We are also proud of our people for what they do outside of their
everyday work - volunteering, fundraising, and participating in or
leading the many DEI networks that are active across the Group.
Regarding this last point, we are particularly proud of the high
DEI (90%+) score we registered as part of our employee survey. DEI
was also one of the criteria assessed by The Sunday Times as part
of its evaluation process. We view our subsequent inclusion in the
publication's list of Best Places to Work as recognition of our
ongoing commitment to ensure that all our people feel valued and
included at XPS.
Environment: FY 2024 was the
third year in which XPS has been a carbon-neutral business. As with
previous years this was achieved through continued reduction in our
own emissions as well as the purchase of UN-approved carbon credits
that cover Scope 1 and 2 emissions, as well as Scope 3 emissions
produced by suppliers.
Our aim is to achieve a significant
reduction in our direct carbon footprint.
In 2023, we submitted our net zero ambitions to the Science Based
Targets initiative for review and certification. Our approach is to
source 100% of our electricity from renewable sources by 2030 and
promote a low-carbon culture amongst staff and
suppliers.
Outlook
The regulatory and market drivers
behind our dependable business model remain in place. The scale and
reputation we have built in our markets, the thought leadership we
provide on regulatory issues and the proprietary technologies and
solutions we have developed, position us well to capitalise on the
long-term opportunities in front of us. We have seen continued
strong demand of our services since the beginning of the year and
maintain an active new business pipeline. We have
continued to grow market share, but with this still under 10% there
is considerable scope for us to grow further.
The increasing overlap between the
pensions and insurance industries through bulk annuities as well as
broader life insurance opportunities offer further meaningful
avenues of growth. To better reflect our
growing overlap between the pensions and insurance industries and
the expanding opportunity set ahead of us, we are making a small
change to our brand identity to trade as XPS
Group*.
We are proud to be joining the FTSE
250 effective from 24 June which is a significant milestone for XPS
and is a testament to the hard work of our colleagues and the
backing of our clients and shareholders.
The strong momentum from FY 2024 has
continued into the new financial year and we remain confident in
delivering against our expectations for the current
year.
* No change to our legal registered company
name
Paul
Cuff
Ben Bramhall
Co-Chief Executive
Officer
Co-Chief Executive Officer
19 June
2024
19 June 2024
FINANCIAL REVIEW
The business has continued to
perform strongly with like-for-like revenues growing 21% year on
year (20% including revenues from the National Pension Trust (NPT)
business, which was disposed of in November 2023). All divisions
have posted strong year on year growth driven by high client demand
for our services. Operational gearing has also continued to
come through with adjusted diluted EPS and adjusted EBITDA growth
exceeding revenue growth for the second consecutive year. We
disposed of the NPT business for a consideration of £35.0 million
and used the proceeds to reduce net debt - further strengthening
the balance sheet and providing greater flexibility for continuing
our growth trajectory. We have continued to develop our own
administration platform which will further enhance our operational
gearing in the future.
Group income statement
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Pensions Actuarial & Consulting
|
93.4
|
77.4
|
21%
|
93.4
|
77.4
|
21%
|
Pensions Investment Consulting
|
|
|
|
|
|
|
Total Advisory
|
113.7
|
95.4
|
19%
|
113.7
|
95.4
|
19%
|
Pensions Administration
|
71.9
|
57.5
|
25%
|
71.9
|
57.5
|
25%
|
SIP
|
11.0
|
9.4
|
17%
|
11.0
|
9.4
|
17%
|
NPT
|
-
|
-
|
-
|
2.8
|
4.3
|
(35%)
|
|
|
|
|
|
|
|
EBITDA
|
54.8
|
41.4
|
32%
|
79.8
|
35.1
|
127%
|
Depreciation & amortisation
|
|
|
|
|
|
|
EBIT 1
|
49.0
|
35.9
|
36%
|
67.0
|
22.7
|
195%
|
|
|
|
|
|
|
|
Profit before tax
|
44.5
|
32.3
|
38%
|
62.5
|
19.1
|
227%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Adjusted
measures exclude the impact of exceptional and non-trading items:
acquisition-related amortisation, share-based payments, corporate
transaction costs, restructuring costs and other items considered
exceptional by virtue of nature, size and incidence. They also
exclude the Group's NPT business, which was sold in November 2023.
See note 2 for details of exceptional and non-trading
items.
Revenue
Total Group revenues grew 20% year
on year, 19% organically. Excluding NPT, total Group revenues
grew 21% year on year.
Pensions Actuarial & Consulting
is the Group's largest business, accounting for 47% of Group
revenues in FY 2024. The division achieved 21% year on year growth
in revenues, due to high client activity levels driven by continued
regulatory changes, expansion of our service offering, in
particular; Risk Transfer, and inflationary increases in
fees.
Pensions Investment Consulting had
another strong year with continued demand driven by regulatory
changes as well as inflationary fee increases. Revenues in this
division grew 13% year on year.
Pensions Administration revenues
grew 25% year on year with a number of new client wins coming on
stream during the year and increased levels of project work such as
GMP equalisation and the McCloud judgement rectification. As with
the Advisory business, inflationary increases in fees also helped
to drive the growth in the year. Pensions Administration accounted
for 36% of the Group revenues (FY 2023: 35%).
SIP revenues were up 17% on prior
year, due to strong underlying sales, and increases in commission
due to the base rate increases in the year.
The NPT business was sold in
November 2023.
Operating costs
Total operating costs (excluding
exceptional and non-trading items) of £150.0 million (FY 2023:
£129.7 million) grew by 16% year on year. The main drivers for the
cost increases are an increase in headcount as the business grew
(1,712 FTE v. 1,574 last year), inflationary/market driven pay
increases, higher bonus cost commensurate with the strong financial
performance, and inflationary increases in other operating
costs.
Adjusted EBITDA
Despite the continuing inflationary
pressures on our costs, the Group has delivered further operational
gearing with adjusted EBITDA growing by 32% year on year - ahead of
the Group adjusted revenue growth of 21%. Adjusted EBITDA margin
was 27.9% (FY 2023: 25.5%).
Adjusted profit before tax grew by
38% year on year benefiting from the strong trading and continued
operational gearing.
Exceptional and non-trading
items
Exceptional and non-trading items
excluding the gain on sale of NPT in the year totalled £15.0
million (FY 2023: £14.2 million). Amortisation of acquired
intangible assets amounted to £7.0 million (FY 2023: £6.9
million).
Share-based payment charges were
£6.3 million (FY 2023: £4.7 million) with higher levels of vesting
expected due to the strong financial performance of the Group and a
higher National Insurance charge resulting from the Group's strong
share price.
The Group also incurred corporate
transaction costs of £1.7 million in the year, which related to
contingent consideration in respect of the acquisition of Penfida
Limited (FY 2023: corporate transaction costs of £2.9 million, of
which £2.1 million was in relation to the acquisition of Penfida
Limited and £0.8 million related to contingent consideration). The
maximum contingent consideration of £3.4 million would be payable
on the second anniversary of the acquisition subject to business
performance which includes retention of clients as well as
continued employment of key employees. As continued employment is
one part of the contingent consideration test, according to IFRS 3,
the entire contingent consideration must be treated as a
post-transaction employment cost accruing over the deferment period
of two years. The contingent consideration is material in size and
it is one-off in nature. As such, in line with the Group's
accounting policies, it has been classified as an exceptional item.
If the entire contingent consideration is not payable at the end of
the two-year period, any resulting credit will also flow through
the exceptional category.
Tax on the exceptional and
non-trading items was a credit of £3.2 million (FY 2023: £2.9
million). This is driven by the unwinding of deferred tax
liabilities linked to intangible assets acquired in previous
periods, deferred tax relating to share-based payments, and
corporation tax on corporate transaction costs.
In November 2023 the Group disposed
of its NPT business. The exceptional gain on the disposal totalled
£34.6 million and was offset by related corporate transaction fees
of £2.1 million. More information on the transaction can be found
in notes 2 and 3 as well as in the Co-Chief Executives'
Review.
Net finance costs
Net finance costs for the year were
£4.5 million (FY 2023: £3.6 million). The increase is due to the
higher bank base rate during the year compared to the prior year.
The loan balance was significantly reduced in the year following
the sale of the NPT business; this led to lower interest costs in
the second half of the year.
Taxation
A tax charge of £11.5 million (FY
2023: £6.2 million) was recognised on adjusted profits. This
represents an effective tax rate of 26% (FY 2023: 19%). The Group
also recognised a tax credit of £3.2 million (FY 2023: £2.9
million) on exceptional and non-trading items, which resulted in an
overall tax charge for the year of £8.3 million (FY 2023: £3.3
million). The increase in the corporation tax rate in FY 2024 to
25% drove an increase in tax charges in the year compared to the
prior year.
Our businesses generate considerable
tax revenue for the UK government. For the year ended 31 March
2024, we paid corporation tax of £11.3 million (FY 2023: £4.9
million); we collected employment taxes of £32.1 million (FY 2023:
£27.0 million) and VAT of £31.9 million (FY 2023: £24.7 million).
Additionally, we have paid £1.3 million (FY 2023: £1.2 million) in
business rates. The total tax contribution of the Group was
therefore £76.6 million (FY 2023: £57.8 million), which equates to
38% of revenue (FY 2023: 35%). Corporation tax paid in the year was
higher due to the fact that the Group is now considered to be very
large for tax payment on account purposes, and so an element of
prior year tax was paid as well as the current years full year
estimated liability. In FY 2025 corporation tax payments will
normalise and will be in line with the related income statement
charge.
EPS
Basic EPS for FY 2024 grew 240% year
on year to 26.2p (FY 2023: 7.7p) owing to the strong financial
performance of the Group and the gain on disposal of NPT.
Basic EPS for the
year excluding the gain on disposal of the NPT business is 10.5p.
which gives growth in the year of 36%.
Adjusted fully diluted EPS grew 21%
year on year to 15.3p in FY 2024 (FY 2023: 12.6p), enabled by the
strong revenue growth as well as delivery of further operational
gearing in the business. Excluding the NPT business sold in
November 2023, the equivalent adjusted fully diluted EPS would be
15.1p in FY 2024 (FY 2023: 12.2p), showing growth of
24%.
Dividend
A final dividend of 7.0p is being
proposed by the Board (FY 2023: 5.7p). The final dividend, which
amounts to £14.6 million (FY 2023: £11.8 million), will be paid on
23 September 2024 to those shareholders on the register on 23
August 2024.
Cash flow, capital expenditure and
financing
|
|
|
Operating
|
|
|
Adjusted EBITDA
|
55.3
|
42.4
|
Change in net working capital
1
|
2.4
|
(0.3)
|
Adjusted operating cash flow (OCF)
2
|
|
|
OCF
conversion
|
104%
|
99%
|
Financing & tax
|
|
|
Net finance expense
|
(4.3)
|
(3.3)
|
Taxes paid
|
(11.3)
|
(4.9)
|
Repayment of / proceeds from new
loans
|
(44.0)
|
4.0
|
Repayment of lease liabilities
|
(2.7)
|
(3.0)
|
|
|
|
Net cash flow after
financing
|
|
|
Investing
|
|
|
Disposal / (acquisition)
|
34.5
|
(8.3)
|
Capex
|
(7.5)
|
(5.4)
|
Net cash flow after
investing
|
|
|
Dividends paid
|
(18.0)
|
(15.3)
|
|
|
|
|
|
|
Net debt 3
|
14.0
|
55.3
|
|
|
|
1
Change in net working capital exclusive of
corporate transaction costs detailed in note 2.
2 Appendix 2 provides a
reconciliation of this figure to the operating cash flow presented
in the consolidated financial statements.
3 Net debt constitutes
long-term borrowings and contingent consideration, less cash. See
note 24 to the consolidated financial statements for a
reconciliation of this figure.
FY 2024 has been another year of
strong cash performance for the Group. Adjusted operating cash flow
increased by £15.6 million driven by a £12.9 million increase in
adjusted EBITDA and a £2.7 million decrease in net working capital
year on year. Overall, this resulted in adjusted operating cash
flow conversion of 104% compared to 99% in the prior
year.
Taxes paid in the year of £11.3
million (FY 2023: £4.9 million) were significantly higher than the
prior year. During the year the Group became a "very large company"
as defined by HMRC for corporation tax purposes, meaning tax is due
in the year to which it relates rather than six months in arrears
as has previously been the case. Therefore, this re-base, as well
as the increase in headline rate from 19% to 25%, has led to the
increase.
During the year, the Group repaid
£44.0 million of the RCF. £0.2 million was spent on extending the
current loan facility for a further year (to October 2026).
Interest paid on the loan balance amounted to £3.9 million (FY
2023: £3.0 million), and £0.3 million was paid on interest relating
to leases in the year (FY 2023: £0.3 million), offset with £0.1
million of interest income received. Capital expenditure in the
year amounted to £7.5 million (FY 2023: £5.4 million) with £1.9
million spent on leasehold improvements and office fit-outs and the
remaining £5.6 million on software development, enhancements to our
platforms, cyber security, and other IT equipment. £2.7 million
relating to leases was paid in the year (FY 2023: £3.0
million).
In November 2023, the Group sold its
NPT business for cash consideration of £35.0 million, and an
additional £2.0 million in respect of the completion balance sheet;
£2.1 million was paid out in transaction-related fees, and a
further £0.4 million was paid out relating to contingent
consideration for prior year acquisitions.
The Group spent £5.6 million (FY
2023: £2.2 million) on acquiring its own shares via its EBT, to be
used to settle employee share options as they vest. £0.6 million
(FY 2023: £0.5 million) was paid to employees as dividend
equivalents on the vesting of share options as well as incurring
£1.5 million of employer's National Insurance. After paying £18.0
million in dividends, the Group cash balance decreased by £3.3
million year on year to close at £10.0 million. The Group had drawn
down £24 million of its £100 million RCF at 31 March 2024,
resulting in net debt of £14.0 million, a decrease of £41.3 million
year on year.
Going concern
Details on the Directors continuing
to adopt the going concern basis in preparing the financial
statements can be found in the Viability Statement in the Strategic
Report in the Annual Report. The Directors have confirmed that,
after due consideration, they have a reasonable expectation that
the Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
financial statements.
Subsidiary undertakings
The subsidiary undertakings of the
Group in the year are listed in note 35 in the Annual
Report.
Snehal Shah
Chief Financial Officer
19 June 2024
Appendix: Reconciliation of reported / statutory results
to alternative performance measures (APMs)
In order to assist the reader's
understanding of the financial performance of the Group, it
continues to present a range of results metrics to demonstrate its
performance. These include those presented in accordance with
International Accounting Standards (IFRS) and APMs. APMs exclude
specific exceptional and non-trading items as set out in note
2.
An explanation of the Group's key
APMs has been detailed below:
APM
|
Closest equivalent statutory
measure
|
APM definition and purpose
|
|
|
|
Adjusted EBITDA
|
Profit / loss from operating
activities
|
Definition: Earnings before
interest, tax, depreciation and amortisation excluding exceptional
and non-trading items and excluding the NPT business disposed of in
November 2023 - see note
3.
Purpose: A recognised APM which
has been central to the business over many years and through
different ownership structures. It allows the Group to monitor the
underlying trading performance of the business without the impact
of external and exceptional and non-trading factors distorting the
figures.
|
OCF conversion
|
Net cash from operating
activities
|
Definition: The conversion of
adjusted EBITDA into cash.
Purpose: Measures how well the
Group is managing its operating cash flows. Unlike net cash from
operating activities, it excludes the impact of tax and exceptional
and non-trading items and therefore allows for a direct and like
for like comparison to the Group's key profit related APM, adjusted
EBITDA.
|
Adjusted diluted EPS excluding the
NPT business
|
Diluted earnings per share
|
Definition: Reflects the profit
after tax, adjusted to remove the impact of exceptional and
non-trading items and the NPT business disposed of in November
2023. Details of this can be found in note 2 as well as in the
reconciliations on the following page of this Chief Financial
Officer's review.
Purpose: Presents an EPS
measure used more widely by investors and analysts and more in line
with how the Group's dividends are calculated.
|
Leverage
|
Cash and cash equivalents
|
Definition: Leverage ratio
showing the amount of third-party debt excluding leases (net of
cash held) relative to last twelve months adjusted pro-forma
EBITDA.
Purpose: Management can measure
exposure to reliance on third-party debt. Leverage is the key
measure in reporting to the Group's banks and driving the interest
rate margin which is added to SONIA to determine the all-in rate
payable.
|
A reconciliation of the Group's APMs
to their closest statutory measures has been provided
below:
1. Adjusted EBITDA excluding
NPT
|
31 March
2024
£m
|
31 March 2023
£m
|
Profit from operating
activities
|
67.0
|
22.7
|
Depreciation and
amortisation
|
12.8
|
12.4
|
Gain on disposal of NPT business
1
|
(32.5)
|
-
|
Trading EBITDA in respect of NPT
business 1
|
(0.5)
|
(1.0)
|
Other exceptional and non-trading
items
|
8.0
|
7.3
|
Adjusted EBITDA excluding NPT
|
54.8
|
41.4
|
2.
OCF conversion
|
|
|
|
31 March
2024
£m
|
31 March
2023
£m
|
Profit from operating
activities
|
67.0
|
22.7
|
Depreciation and
amortisation
|
12.8
|
12.4
|
Other exceptional and non-trading
cash items2
|
8.0
|
7.3
|
Gain on disposal of NPT
business
|
(32.5)
|
-
|
Trading EBITDA
|
55.3
|
42.4
|
Net cash from operating
activities
|
42.9
|
34.5
|
Income tax paid
|
11.3
|
4.9
|
Cash exceptional and non-trading
items3
|
3.5
|
2.7
|
Adjusted operating cash flow
|
57.7
|
42.1
|
OCF
conversion
|
104%
|
99%
|
3.
Adjusted diluted EPS excluding NPT
|
|
|
|
31 March
2024
£m
|
31 March
2023
£m
|
Profit after tax and total
comprehensive income for the year
|
54.2
|
15.8
|
Adjustment for exceptional and non
trading items (net of tax) 2
|
(20.7)
|
11.3
|
Profit after tax from operating
activities for NPT business 1
|
(0.4)
|
(0.8)
|
Adjusted profit after tax
|
33.1
|
26.3
|
Dilutive weighted average number of
shares ('000)
|
219,621
|
216,071
|
Adjusted diluted EPS excluding NPT (pence)
|
15.1
|
12.2
|
4.
Leverage
|
|
|
|
31 March
2024
£m
|
31 March
2023
£m
|
Cash and cash equivalents
|
10.0
|
13.3
|
Bank debt
|
(24.0)
|
(68.0)
|
Contingent consideration
|
-
|
(0.6)
|
Net debt 4
|
(14.0)
|
(55.3)
|
Trading EBITDA
|
55.3
|
42.4
|
Impact of IFRS 16 ignored for bank
covenants purposes5
|
(3.0)
|
(2.9)
|
Pro-forma impact of M&A
transactions in year6
|
(0.5)
|
0.6
|
Adjusted EBITDA for
covenant
|
51.8
|
40.1
|
Leverage
|
0.27x
|
1.38x
|
[1] See note
3.
2 See note
2.
3 This is the
cash element of exceptional and non-trading items: National
Insurance on share-based payments (note 13 of the consolidated
financial statements) and transaction costs relating to the NPT
disposal in note 3, (FY 2023: National Insurance on
share-based payments, and other corporate transaction
costs).
4 See note 24
of the consolidated financial statements.
5 The Group's
banking facilities agreement ignores IFRS 16 for covenant test
purposes. Debt excludes lease-related liabilities and to be on a
consistent basis adjusted pro-forma EBITDA includes rent-related
costs as an operating expense unlike in the statutory income
statement where they are treated as depreciation of right-of-use
assets with a related financing cost.
6 Pro-forma-related adjustments reflect the impact of
M&A-related transactions as if they had been included for the
whole financial year. The FY 2024 adjustment is to reflect the NPT
sale taking place on 1 April 2023 (i.e. it removes the EBITDA that
the NPT business contributed between 1 April 2023 and the point it
was sold on 20 November 2023. The FY 2023 adjustment is to present
the contribution that the Penfida acquisition would have made had
the business been acquired on 1 April 2022 rather than the actual
acquisition date of 20 September 2022.
Principal Risks and Uncertainties
The risk management controls
frameworks deployed across the Group continues to be developed and
enhanced, ensuring it supports the growth of the business.
Effective risk management provides the Group with fully articulated
risks, enabling us to identify and embrace opportunity. They also
ensure that internal controls are reviewed and developed to protect
the Group and its customers from new and developing threats such as
cyber crime.
Over the last year our risk
management and internal controls frameworks have continued to
operate effectively, enabling us to respond to the evolving risks
inherent in day-to-day operations, alongside new opportunities and
initiatives. The Group's risk environment is regularly reviewed by
senior management alongside the internal controls frameworks in
place. This ensures that they continue to be effective, and
enhancements to address changes in the external threat environment
are considered. Internal and external assurance frameworks support
this, ensuring regular, planned reviews to validate control design
and effectiveness, as well as highlighting opportunities for
further improvements. Cyber crime continues to be a key focus for
senior management, recognising the threats to the Group from
phishing, ransomware and supply chain attacks.
We continuously develop our risk
management capabilities to support the Group and address the
evolving threats in our market. Since the last report there
have been a number of significant enhancements,
including:
· the
rollout of a new Risk Management Policy which provides clear
articulation to all staff of how the key components of the Group's
risk management framework support its objectives. The
introduction of new risk reporting templates will further support
the business to articulate its risk profile, alongside highlighting
and reporting on the effectiveness of key internal controls.
This has been supported by an externally facilitated risk review
project with senior management, resulting in a refreshed Group risk
register;
· the
enhancement of the existing external assurance frameworks to ensure
that they continue to meet the developing needs of the
business. This supported the recertification to the PASA
pensions administration standard and the successful triennial ISO
27001 information security audit;
· the
development of the existing Risk team, through the recruitment of
an additional subject matter expert, alongside supporting existing
team members to achieve and maintain this status. This ensures that
the Group can effectively maintain its risk and controls frameworks
and provide effective expert support and challenge to business
areas as required;
· the
development of the existing ISO 27001 information security
frameworks to recognise new and emerging threats. This included
those inherent with the in-house development of the Aurora platform
and the controls frameworks required to support ongoing secure
design, development and implementation;
· the
development of the Group's ability to effectively respond to a
major cyber incident. This was done through the introduction
of Board-down testing, supported by an ongoing programme of
activities to ensure operational resilience capabilities are in
place, maintained and tested on a regular basis;
· the
development of the internal controls frameworks in place to manage
key risks such as fraud through the introduction of updated
policies and guidance. This includes the identification and
documentation of key controls as well as mandated controls,
escalation and reporting processes;
· the
development of the existing third-party assurance framework,
recognising the importance of supply chain risk in relation to
cyber and business resilience risks;
· the
development of the Environmental Management System to both identify
and manage our impact on the environment. This includes supporting
TCFD reporting, assessment of the risks associated with climate
change, and the Group's net zero strategy; and
· the
ongoing development of the executive-level Risk Management
Committee to support the identification of new and emerging risks
as part of its quarterly meeting cycle. This includes
inviting external experts to facilitate horizon scanning and deep
dives on specific topics.
The Group continues to operate a
three lines of defence model which supports the promotion of
effective risk management taking into account the Group's risk
appetite. The Board, with the support of the Audit & Risk
Committee, has identified the principal risks that could materially
impact the Group's ability to achieve its objectives and deliver
its strategy. These include general business risks that are faced
by the Group and are comparable to those that would be faced by
similar businesses operating in the pensions sector. These general
business risks include:
• Political/economic/social - risks
created by the political, economic/ financial and social
environment in which we operate, e.g. war, demographic trends,
pandemics, government influence on business, currency changes,
market volatility, interest rates, or liquidity.
• Competition - risks of change to
the demand side of the business due to changes in customer
demands or competitors, likely to influence the entire industry,
e.g. aggressive competitor pricing, consolidation trends, major
technological innovation, or substitute technologies. These changes
may not directly affect the Group but could influence the entire
industry.
• Legal and regulatory - risks associated
with the criminal and civil judicial processes and contract law,
e.g. not identifying changes required by new legislation, increased
litigation in a particular field, or industrial
accidents.
• Environmental - risks associated with
climate-related change, how these changes can impact business
models and how businesses in turn can manage the impact of their
operations on the environment.
The material risks and uncertainties
which are either unique to the Group or apply to the pensions
industry in which it operates are detailed below. They are not set
out in any priority order, nor do they include all those associated
with the Group. Specific risks that are material to XPS Group
are:
Strategy
|
Stable
|
Description
Risks linked to the assumptions of future
development and size of pensions market used to develop
the strategy or business model or business portfolio, e.g. poor
data, group think or lack of diversity of opinions.
|
Key mitigations
The Board approves and regularly reviews the
Group's strategy in conjunction with budgets, targeting long-term
increases in shareholder value and ensuring robust independent
challenge.
Key decisions are assessed against risk appetites for
key Group risks with a risk management framework in place to
identify and escalate where strategic decisions may have unintended
impacts.
|
Rationale for change
Stable
|
Strategic planning and execution
|
Improving
|
Description
Risks linked to assessing, evaluating, planning
and executing the strategy, e.g. poor budgeting and planning,
inadequate or misleading communications or poor management of
change or projects.
|
Key mitigations
The Board regularly reviews the Group's
strategy, supported by the Executive with responsibilities assigned
for the delivery of initiatives and provision of regular progress
updates.
Specific
project management resources are used to deliver large-scale change
initiatives, allowing risks to delivery of initiatives to be
clearly identified at planning stage along with
mitigations.
|
Rationale for change
XPS has continued to build out its
frameworks to design and successfully deliver market-leading
innovation and technology change. This continues to be evidenced by
the ongoing rollout of the new Aurora administration
system.
|
Financial performance
|
Improving
|
Description
Risks relating to the failure to monitor and
appropriately manage the financial performance of the Group on an
ongoing basis which could lead to poor management decisions, higher
costs and/or inaccurate external financial reporting.
|
Key mitigations
The Group has a highly qualified and
experienced financial reporting team. There is an extensive
financial controls framework in place and key controls are
regularly tested by internal and external audits. The Group
undertakes detailed bottom-up budgeting and reforecasting exercises
with the final budget and reforecast approved by the
Board.
Management information is published on a regular basis and the
Executive Committee reviews the financial performance of the Group
at least monthly. The Board receives and scrutinises the financial
performance of the Group at each Board meeting.
|
Rationale for change
The Group has continued to
improve its budgeting and forecasting frameworks, supporting
growth. This is evidenced by consistent delivery of financial
results in line with or ahead of market consensus.
|
Errors
|
Stable
|
Description
Risks relating to material mistakes made by
staff, including non-compliance with established procedures, e.g.
failure to calculate benefits correctly or not following peer
review processes. These may not crystallise
immediately and only become apparent a number of years after
completion of work.
|
Key mitigations
The Group recruitment process ensures only
high-calibre staff are recruited, who are then supported by
training programmes. Staff use standardised documented processes
and checklists for key
processes.
Higher risk work is identified with peer review and additional
sign-off required, with regular quality audits to confirm processes
are being followed correctly. Insurance arrangements are in place
to limit the loss should an error occur. Root cause analysis is
used to identify where controls improvements are required, which
are monitored through to implementation.
|
Rationale for change
Stable
|
Theft and fraud (financial and physical
assets)
|
Improving
|
Description
Risks relating to the safeguarding of Group and
client financial and physical assets from malicious actors, e.g.
stealing physical assets, deliberate misrepresentation leading to
fraud or theft from Group or client bank
accounts.
|
Key mitigations
The Group deploys robust physical and systems
access controls, along with enforcing segregation of duties to
prevent individuals from making fraudulent payments or
transfers.
These controls are supported
with staff vetting, training and awareness and control frameworks
are regularly independently
audited.
Insurance arrangements are in place to protect against larger
claims.
|
Rationale for change
Controls frameworks continue to be
developed to manage this risk, addressing controls enhancements
identified through audits and internal risk assessments. We
continue to see attempts to impersonate pension scheme members,
albeit in small numbers. These attempts are identified and
prevented through the existing controls frameworks.
|
Information/cyber security
|
Improving
|
Description
Risks relating to the confidentiality,
integrity and availability of information assets including IT
systems, e.g. unauthorised access to or disclosure of staff or
client information, denial of access to systems or data required or
business continuity incidents caused by equipment
breakdown/fire/flood.
|
Key mitigations
The Group has an Information Security
Management System (ISMS) in place to ensure that risks are
identified and managed effectively. This includes a range of
technical controls policies and procedures, supported by a
dedicated Cyber Security team, and a 24/7 Security Operations
Centre. These are supported by regular independent audits and
penetration
tests.
All
staff are provided with comprehensive policies and guidance, with
awareness of key topics reinforced with a programme of training and
testing initiatives, e.g. phishing awareness. The Group has
dedicated business continuity frameworks and capabilities to
minimise the impact of incidents affecting the Group's data,
facilities or systems. These frameworks include incident management
capabilities to allow the Group to effectively coordinate and
communicate with stakeholders in the case of a significant
incident.
|
Rationale for change
The Group has continued to develop its
capabilities, recognising the continued evolution of this
risk. These activities are supported by regular threat
assessments to ensure controls continue to address new and emerging
threats. The annual cyber programme plans the implementation of new
technical controls to meet these threats. It also takes into
account the findings of regular penetration and purple team
testing. Additional assurance is provided through the
existing certification frameworks including ISO 27001 and Cyber
Essential Plus certifications and by having appropriate
insurance policies in place.
|
Staff/human resources
|
Stable
|
Description
Risks relating to
our people, e.g.
compensation, retention,
succession planning,
skills
and competence and
management capability.
|
Key mitigations
The Group's recruitment strategy is to seek
professional, experienced and qualified staff utilising robust
staff recruitment and selection processes. This is supported by
comprehensive training, development and performance management
processes, with longer-term incentives in place to
aid retention. Regular key staff reviews ensure succession
planning is kept up to date and remains appropriate. Staffing
requirements are considered as part of the strategy and budgeting
process to ensure alignment with business plans.
|
Rationale for change
Stable
|
Third-party supplier/outsourcing
|
Stable
|
Description
Risks relating to the use of third parties to
support our operations, e.g. poor due diligence and selection
processes, failure of a supplier to follow agreed upon procedures
or financial failure of supplier resulting in inability to deliver
service.
|
Key mitigations
The Group has a formal selection process that
ensures due diligence is carried out, which is proportionate to the
risk of the potential failure of the third party. The
approvals and signing framework also ensure contracts include key
risks relating to services provided and risks identified are
managed and accepted prior to agreements being signed. This is
supported by ongoing monitoring of key third parties, including
SLAs and financial
status.
Where there
is a reliance on a single supplier, contingency plans are in place
to protect against impacts of outages or failure.
|
Rationale for change
Stable
|
Client engagement
|
Stable
|
Description
Risks relating to the provision of poor service
or advice to clients, e.g. advice that is not clear, not understood
by the client or poorly presented or uses out of date technologies,
but not errors.
|
Key mitigations
The Group client engagement process ensures
that expectations are matched to Group capabilities. Regular
ongoing dialogue with clients ensures that the services provided
meet their requirements and continue to be appropriate to their
specific
needs.
Client
surveys are used to gather feedback and identify trends and
insights.
|
Rationale for change
Stable
|
|
|
|
Business conduct and reputation
|
Stable
|
Description
Risks that could lead to a breach of acceptable
conduct or ethics, impacting the Group's brand, image or
reputation. Failure to ensure services are appropriate for client's
needs, any discrimination, or a poor response to a cyber
incident or client complaint.
|
Key mitigations
The Group's mission, vision and values clearly
set out the tone from the top, highlighting to all staff the
conduct and ethics that are expected from them at all times. This
is supported by a recruitment strategy that seeks professional,
experienced and qualified staff who fit with the Group's values.
Due diligence of third parties considers supply chain risks,
ensuring that only suppliers that comply with their legal
obligations are selected.
The Group has incident management processes in
place to ensure that it is able to effectively respond to
significant events that could impact its brand or reputation, which
is regularly tested.
|
Rationale for change
Stable
|
The Directors confirm that they have
carried out a robust assessment of the principal risks facing the
Group, including those that would threaten its business model,
future performance, solvency or liquidity. The principal risks are
those listed above. The Directors do not believe there to be any
additional emerging risks that are not already addressed within the
principal risks and uncertainties section.
The Directors confirm in the
Directors' Responsibility Statement that they consider that the
Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group's position, performance, business
model and strategy.
This Strategic Report has been
approved by the Board and signed by order of the Board:
Paul
Cuff
Ben Bramhall
Co-Chief Executive
Officer
Co-Chief Executive Officer
19 June
2024
19 June 2024
Consolidated Statement of
Comprehensive Income
for the year ended 31 March
2024
|
|
Year ended 31 March
2024
|
Year
ended 31 March 2023
|
|
|
Trading
items
|
Non-trading and exceptional
items
|
Total
|
Trading
items
|
Non-trading and exceptional items
|
Total
|
|
Note
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Revenue
|
4
|
199,432
|
-
|
199,432
|
166,596
|
-
|
166,596
|
Other operating income
|
|
-
|
92
|
92
|
-
|
197
|
197
|
Operating expenses
|
|
(149,960)
|
(15,128)
|
(165,088)
|
(129,652)
|
(14,413)
|
(144,065)
|
Gain on disposal
|
3
|
-
|
32,538
|
32,538
|
-
|
-
|
-
|
Profit/(loss) from operating activities
|
|
49,472
|
17,502
|
66,974
|
36,944
|
(14,216)
|
22,728
|
Finance income
|
5
|
50
|
-
|
50
|
10
|
-
|
10
|
Finance costs
|
5
|
(4,543)
|
-
|
(4,543)
|
(3,596)
|
-
|
(3,596)
|
Profit/(loss) before tax
|
|
44,979
|
17,502
|
62,481
|
33,358
|
(14,216)
|
19,142
|
Income tax
(expense)/credit
|
6
|
(11,483)
|
3,169
|
(8,314)
|
(6,215)
|
2,910
|
(3,305)
|
Profit/(loss) after tax and total comprehensive income/(loss)
for the year
|
|
33,496
|
20,671
|
54,167
|
27,143
|
(11,306)
|
15,837
|
|
|
|
|
|
|
|
|
Memo
|
|
|
|
|
|
|
|
EBITDA
|
|
55,295
|
24,536
|
79,831
|
42,448
|
(7,334)
|
35,114
|
Depreciation and amortisation
|
|
(5,823)
|
(7,034)
|
(12,857)
|
(5,504)
|
(6,882)
|
(12,386)
|
Profit/(loss) from operating activities
|
|
49,472
|
17,502
|
66,974
|
36,944
|
(14,216)
|
22,728
|
|
|
|
|
|
|
|
|
|
|
Pence
|
|
Pence
|
Pence
|
|
Pence
|
Earnings per share attributable to the ordinary equity holders
of the Company:
|
|
Adjusted
|
|
|
Adjusted
|
|
|
Profit or loss:
|
|
|
|
|
|
|
|
Basic earnings per share
|
8
|
16.2
|
-
|
26.2
|
13.2
|
-
|
7.7
|
Diluted earnings per share
|
8
|
15.3
|
-
|
24.7
|
12.6
|
-
|
7.3
|
Consolidated Statement of Financial
Position
for the year ended 31 March
2024
|
|
31 March
|
31
March
|
|
|
2024
|
2023
|
|
Note
|
£'000
|
£'000
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Property, plant and
equipment
|
|
3,976
|
3,079
|
Right-of-use assets
|
|
8,892
|
9,684
|
Intangible assets
|
|
208,070
|
212,103
|
Other financial assets
|
|
-
|
1,847
|
|
|
220,938
|
226,713
|
Current assets
|
|
|
|
Trade and other
receivables
|
|
50,922
|
43,765
|
Cash and cash
equivalents
|
|
10,005
|
13,285
|
|
|
60,927
|
57,050
|
Total assets
|
|
281,865
|
283,763
|
|
|
|
|
Liabilities
|
|
|
|
Non-current liabilities
|
|
|
|
Loans and borrowings
|
7
|
23,386
|
67,310
|
Lease liabilities
|
|
7,295
|
7,234
|
Provisions
|
|
1,802
|
1,869
|
Trade and other payables
|
|
-
|
845
|
Deferred income tax
liabilities
|
|
15,593
|
18,445
|
|
|
48,076
|
95,703
|
Current liabilities
|
|
|
|
Lease liabilities
|
|
1,872
|
2,701
|
Provisions
|
|
1,914
|
2,009
|
Trade and other payables
|
|
43,722
|
31,218
|
Current income tax
liabilities
|
|
427
|
2,280
|
Contingent consideration
|
|
-
|
568
|
|
|
47,935
|
38,776
|
Total liabilities
|
|
96,011
|
134,479
|
Net assets
|
|
185,854
|
149,284
|
|
|
|
|
Equity
|
|
|
|
Equity attributable to owners of the parent
|
|
|
|
Share capital
|
|
104
|
104
|
Share premium
|
|
1,786
|
1,786
|
Merger relief reserve
|
|
48,687
|
48,687
|
Investment in own shares held in
trust
|
|
(2,925)
|
(1,350)
|
Retained earnings
|
|
138,202
|
100,057
|
Total equity
|
|
185,854
|
149,284
|
Consolidated Statement of Changes in
Equity
for the year ended 31 March
2024
|
Share
capital
£'000
|
Share
premium
£'000
|
Merger
relief reserve
£'000
|
Investment in own shares
£'000
|
Accumulated (deficit) / retained earnings
£'000
|
Total
equity
£'000
|
Balance at 1 April 2022
|
103
|
116,804
|
48,687
|
(4,157)
|
(17,002)
|
144,435
|
Comprehensive income and total
comprehensive income for the year
|
-
|
-
|
-
|
-
|
15,837
|
15,837
|
Contributions by and distributions
to owners:
|
|
|
|
|
|
|
Share capital issued
|
1
|
1,786
|
-
|
-
|
-
|
1,787
|
Share premium reduction
|
-
|
(116,804)
|
-
|
-
|
116,804
|
-
|
Dividends paid (note 9)
|
-
|
-
|
-
|
-
|
(15,331)
|
(15,331)
|
Dividend equivalents paid on
exercised share options
|
-
|
-
|
-
|
-
|
(549)
|
(549)
|
Shares purchased by Employee
Benefit Trust for cash
|
-
|
-
|
-
|
(2,200)
|
-
|
(2,200)
|
Share-based payment expense -
equity settled from Employee Benefit Trust
|
-
|
-
|
-
|
5,007
|
(4,137)
|
870
|
Share-based payment expense -
IFRS 2 charge
|
-
|
-
|
-
|
-
|
3,892
|
3,892
|
Deferred tax movement in respect of
share-based payment expense
|
-
|
-
|
-
|
-
|
258
|
258
|
Current tax movement in respect of
share-based payment expense
|
-
|
-
|
-
|
-
|
285
|
285
|
Total contributions by and
distributions to owners
|
1
|
(115,018)
|
-
|
2,807
|
101,222
|
(10,988)
|
Balance at 31 March 2023
|
104
|
1,786
|
48,687
|
(1,350)
|
100,057
|
149,284
|
Balance at 1 April 2023
|
104
|
1,786
|
48,687
|
(1,350)
|
100,057
|
149,284
|
Comprehensive income and total
comprehensive income for the year
|
-
|
-
|
-
|
-
|
54,167
|
54,167
|
Contributions by and distributions
to owners:
|
|
|
|
|
|
|
Dividends paid (note 9)
|
-
|
-
|
-
|
-
|
(18,025)
|
(18,025)
|
Dividend equivalents paid on
exercised share options
|
-
|
-
|
-
|
-
|
(576)
|
(576)
|
Shares purchased by Employee
Benefit Trust for cash
|
-
|
-
|
-
|
(5,621)
|
-
|
(5,621)
|
Share-based payment expense -
equity settled from Employee Benefit Trust
|
-
|
-
|
-
|
4,046
|
(4,019)
|
27
|
Share-based payment expense -
IFRS 2 charge
|
-
|
-
|
-
|
-
|
4,910
|
4,910
|
Deferred tax movement in respect of
share-based payment expense
|
-
|
-
|
-
|
-
|
1,167
|
1,167
|
Current tax movement in respect of
share-based payment expense
|
-
|
-
|
-
|
-
|
521
|
521
|
Total contributions by and
distributions to owners
|
-
|
-
|
-
|
(1,575)
|
(16,022)
|
(17,597)
|
Balance at 31 March 2024
|
104
|
1,786
|
48,687
|
(2,925)
|
138,202
|
185,854
|
Consolidated Statement of Cash
Flows
for the year ended 31 March
2024
|
Note
|
Year ended
31 March
2024
£'000
|
Year
ended
31
March
2023
£'000
|
Cash flows from operating activities
|
|
|
|
Profit for the year
|
|
54,167
|
15,837
|
Adjustments for:
|
|
|
|
Depreciation
|
|
892
|
897
|
Depreciation of right-of-use
assets
|
|
2,887
|
2,854
|
Amortisation
|
|
9,061
|
8,635
|
Finance income
|
5
|
(50)
|
(10)
|
Finance costs
|
5
|
4,543
|
3,596
|
Gain on sale of business
|
3
|
(34,639)
|
-
|
Loss on disposal of right-of-use
assets
|
|
117
|
-
|
Share-based payment
expense
|
|
4,910
|
3,892
|
Other operating income
|
|
(92)
|
(197)
|
Income tax expense
|
6
|
8,314
|
3,305
|
|
|
50,110
|
38,809
|
Increase in trade and other
receivables
|
|
(7,462)
|
(3,432)
|
Increase in trade and other
payables
|
|
11,993
|
3,603
|
(Decrease)/increase in
provisions
|
|
(379)
|
442
|
|
|
54,262
|
39,422
|
Income tax paid
|
|
(11,331)
|
(4,866)
|
Net cash inflow from operating activities
|
|
42,931
|
34,556
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Finance income received
|
5
|
50
|
10
|
Acquisition of subsidiary, net of
cash acquired
|
|
(405)
|
(8,268)
|
Purchases of property, plant and
equipment
|
|
(1,851)
|
(640)
|
Purchases of software
|
|
(5,655)
|
(4,814)
|
Increase in restricted cash
balances - other financial assets
|
|
-
|
(33)
|
Disposal of business
|
3
|
37,035
|
-
|
Net cash inflow/(outflow) from investing
activities
|
|
29,174
|
(13,745)
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
Proceeds from the issue of share
capital
|
|
-
|
1,787
|
Proceeds from loans net of
capitalised costs
|
|
8,000
|
11,000
|
Repayment of loans
|
|
(52,000)
|
(7,000)
|
Payment relating to extension of
loan facility
|
|
(200)
|
-
|
Sale of own shares
|
|
27
|
870
|
Purchase of ordinary shares by
EBT
|
|
(5,621)
|
(2,200)
|
Interest paid
|
|
(3,905)
|
(2,985)
|
Lease interest paid
|
|
(331)
|
(311)
|
Payment of lease
liabilities
|
|
(2,754)
|
(2,957)
|
Dividends paid to the holders of
the parent
|
|
(18,025)
|
(15,331)
|
Dividend equivalents paid on
exercise of share options
|
|
(576)
|
(549)
|
Net cash outflow from financing activities
|
|
(75,385)
|
(17,676)
|
Net increase in cash and cash
equivalents
|
|
(3,280)
|
3,135
|
Cash and cash equivalents at start
of year
|
|
13,285
|
10,150
|
Cash and cash equivalents at end of year
|
|
10,005
|
13,285
|
Selected notes to the Consolidated Financial
Statements
for the year ended 31 March
2024
1
Accounting Basis
The financial information set out
in this document does not constitute the Company's statutory
accounts for the years ended 31 March 2024 or 31 March 2023.
Statutory accounts for the year ended 31 March 2024, which were
approved by the directors on 19 June 2024, and 31 March 2023 have
been reported on by the Independent Auditors. The Independent
Auditor's report on the Annual Report and Accounts for years ended
31 March 2024 and 31 March 2023 were unqualified, did not draw
attention to a matter by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act
2006.
The statutory accounts for the year
ended 31 March 2024 will be delivered to the Registrar of Companies
in due course and will be posted to shareholders shortly, and
thereafter will be available from the Company's registered office
at Phoenix House, 1 Station Hill, Reading, RG1 1NB and from the
Company's website www.xpsgroup.com.
The statutory accounts for the year ended 31 March
2023 have been filed with the Registrar of Companies and are
available from the Company's registered office and from the
Company's website.
The financial information set out
in these results has been prepared in accordance with UK
adopted International Accounting Standards. The accounting policies adopted in
these results have been consistently applied to all the years
presented and are consistent with the policies used in the
preparation of the financial statements for the year ended 31 March
2023. New standards, amendments, and interpretations to existing
standards effective for the first time for periods beginning on (or
after) 1 April 2023, which have been adopted by the Group have not
been listed, since they have no material impact on the financial
statements.
2
Non-trading and exceptional items
|
|
Year ended 31 March
2024
|
Year
ended 31 March 2023
|
|
|
Total before
tax
|
Tax on adjusting items
6
|
Adjusting items after
taxation
|
Total
before tax
|
Tax on
adjusting items 5
|
Adjusting
items after taxation
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Corporate transaction costs
1
|
|
(1,718)
|
(212)
|
(1,930)
|
(2,871)
|
216
|
(2,655)
|
Exceptional items
|
|
(1,718)
|
(212)
|
(1,930)
|
(2,871)
|
216
|
(2,655)
|
Contingent consideration write back
2
|
|
92
|
-
|
92
|
197
|
-
|
197
|
Share-based payment costs
3
|
|
(6,376)
|
1,623
|
(4,753)
|
(4,660)
|
1,370
|
(3,290)
|
Amortisation of acquired intangibles
4
|
|
(7,034)
|
1,758
|
(5,276)
|
(6,882)
|
1,324
|
(5,558)
|
Gain on disposal
5
|
|
32,538
|
-
|
32,538
|
-
|
-
|
-
|
Non-trading items
|
|
19,220
|
3,381
|
22,601
|
(11,345)
|
2,694
|
(8,651)
|
Total
|
|
17,502
|
3,169
|
20,671
|
(14,216)
|
2,910
|
(11,306)
|
1 The Group incurred total
corporate transaction costs of £1,718,000 (2023: £2,871,000) in the
year, of which £1,689,000 (2023: £845,000) related to amounts owed
to the vendor as earn out in respect of the acquisition of Penfida
Limited. The maximum payout of £3,379,000 would be payable on the
second anniversary of the acquisition subject to business
performance which includes retention of clients as well as
continued employment of key employees. As continued employment is
one condition of the share purchase agreement, then according to
IFRS 3, the entire additional amount must be treated as a
post-transaction employment cost accruing over the deferment period
of two years to September 2024. This additional amount is material
in size and it is one-off in nature. As such, in line with the
Group's accounting policies, it has been classified as an
exceptional item. If the entire amount is not payable at the end of
the two year period, any resulting credit will also flow through
the exceptional category. Additionally, the Group incurred £29,000
(2023: £2,026,000) of costs relating to other potential M&A
activities explored by the Group during the year. The prior year
included costs relating to the acquisition of Penfida Limited and
other potential M&A opportunities explored by the Group in the
year. The overall transaction costs are material and do not reflect
the underlying performance of the Group. Users of the accounts
expect these costs to be disclosed separately, to aid visibility of
underlying performance. The timing of these costs can also vary and
are normally not aligned with the related benefits of the
transaction.
2 The contingent consideration
write back relates to the revaluation of the contingent
consideration for the MJF acquisition. This income is deemed to be
exceptional in nature as it is linked to a payment set out in the
business transfer agreement for the Michael J Field acquisition in
February 2022. This income is not related to underlying business
performance and so is disclosed as non-trading income. Management
do not include this figure in income when reviewing overall
business performance. There are no further payments to be made in
respect of this acquisition.
3 Share-based payment expenses and
related NI are included in non-trading and exceptional costs as
they are a significant non-cash costs which are excluded from the
results for the purposes of measuring performance for PSP/SEP
awards and dividend amounts. Additionally, the largely non-cash
related credits go directly to equity and so have a limited impact
on the reserves of the Group. They are therefore shown as a
non-trading item to give clarity to users of the accounts on the
profit figures that dividends and PSP performance are based
on.
4 During the year the Group
incurred £7,034,000 of amortisation charges in relation to acquired
intangible assets (customer relationships and brand) (2023:
£6,882,000). As this figure is material, and is linked to
non-trading activity, management exclude this cost when reviewing
and reporting on the underlying performance of the Group.
Similarly, users of the accounts expect to be able to assess the
profitability and growth of the Group excluding this
figure.
5 The gain on disposal relates to
the NPT business disposal disclosed in note 3. This is a material
figure which does not reflect the underlying performance of the
Group and is non-recurring. This gain has a significant impact on
basic EPS (26.2p including this gain, 10.5p excluding
it).
6 The tax credit on exceptional and
non-trading items of £3,169,000 (2023: £2,910,000) represents 18%
(2023: 20%) of the exceptional and non-trading items incurred of
£17,502,000 (2023: £14,216,000). This is different to the expected
tax charge of 25% (2023: credit of 19%), as various adjustments are
made to tax including for deferred tax, and the exclusion of
amounts not allowable for tax - in particular the gain relating to
the sale of the NPT business in the year.
3
Gain on disposal
On 20 November 2023, the Group sold
the National Pension Trust ("NPT"), to SEI. The sale is intended to
create a market leading defined contribution proposition for
employers and pension scheme members. The sale creates a strategic
partnership between XPS Pensions Group and SEI, under which the
Group will provide wide ranging services to continue to support NPT
and SEI.
The total cash consideration payable
to the Group is up to £42.5 million, comprising of £35.0 million
initial consideration and contingent consideration of up to £7.5
million based on business performance over two years.
This £7.5 million has not been recognised as the
threshold for recognition has not been met at 31 March
2024.
The Transaction positions the SEI
Master Trust to continue delivering best-of-breed service at
increased scale in partnership with NPT. The Group will continue to
provide high-quality pensions administration and consultancy
services to NPT and SEI which will ensure continuity of service to
the members and clients. SEI will benefit from enhanced
opportunities in the growing master trust space, and XPS will
benefit as a strategic partner of SEI.
The post-tax gain on disposal was
determined as follows:
|
Year ended
|
|
31 March
|
|
2024
|
|
£'000
|
Cash consideration
received
|
37,035
|
Total consideration received and net cash inflow on
disposal
|
37,035
|
|
|
Net assets disposed
|
|
Intangible assets
|
(353)
|
Other financial assets - restricted
cash
|
(1,847)
|
Trade and other
receivables
|
(305)
|
Trade and other payables
|
109
|
|
(2,396)
|
|
|
Corporate costs in relation to
disposal
|
(2,101)
|
Pre-tax gain on disposal
|
32,538
|
Related tax expense
|
-
|
Gain on disposal
|
32,538
|
The amount reflected as the gain in
the consolidated statement of cash flows is the £37,035,000
proceeds, less the £2,396,000 adjustment for balance sheet items
disposed of.
3
Gain on disposal (continued)
A critical judgment has been applied
to this transaction and it has not been treated as a discontinued
operation, as under IFRS 5 a discontinued operation cannot be
smaller than a cash-generating unit (CGU). The NPT business did not
form a single CGU, therefore the disposal has not been presented as
a discontinued operation. Had this been treated as a discontinued
operation, then the disposal of this business would have been
presented as a profit on discontinued operation within the
statement of comprehensive income, along with the trading results
for the NPT business.
The results of the NPT business are
shown below.
|
|
Year ended 31 March
2024
|
Year
ended 31 March 2023
|
|
|
Trading
items
|
Non-trading and exceptional
items
|
Total
|
Trading
items
|
Non-trading and exceptional items
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Revenue
|
|
2,759
|
-
|
2,759
|
4,332
|
-
|
4,332
|
Operating expenses
|
|
(2,374)
|
-
|
(2,374)
|
(3,451)
|
-
|
(3,451)
|
Gain on disposal
|
|
-
|
32,538
|
32,538
|
-
|
-
|
-
|
Profit from operating activities
|
|
385
|
32,538
|
32,923
|
881
|
-
|
881
|
Finance costs
|
|
(9)
|
-
|
(9)
|
-
|
-
|
-
|
Profit before tax
|
|
376
|
32,538
|
32,914
|
881
|
-
|
881
|
Income tax expense
|
|
(94)
|
-
|
(94)
|
(175)
|
-
|
(175)
|
Profit after tax
|
|
282
|
32,538
|
32,820
|
706
|
-
|
706
|
|
|
|
|
|
|
|
|
Memo
|
|
|
|
|
|
|
|
EBITDA
|
|
454
|
32,538
|
32,992
|
1,013
|
-
|
1,013
|
Depreciation and amortisation
|
|
(69)
|
-
|
(69)
|
(132)
|
-
|
(132)
|
Profit from operating activities
|
|
385
|
32,538
|
32,923
|
881
|
-
|
881
|
4
Operating segments
In accordance with IFRS 8 Operating
Segments, an operating segment is defined as a business activity
whose operating results are reviewed by the chief operating
decision-maker ('CODM') and for which discrete information is
available. The Group's CODM is the Board of Directors.
The Group has one operating
segment, and one reporting segment due to the nature of services
provided across the whole business being the same: pension and
employee benefit solutions. The Group's revenues, costs, assets,
liabilities and cash flows are therefore totally attributable to
this reporting segment. The table below shows the disaggregation of
the Group's revenue, by product line.
|
Year ended
|
Year
ended
|
|
31 March
|
31
March
|
|
2024
|
2023
|
|
£'000
|
£'000
|
Pensions Actuarial &
Consulting
|
93,411
|
77,388
|
Pensions Administration
|
71,929
|
57,444
|
Pensions Investment
Consulting
|
20,316
|
18,009
|
SIP 1
|
11,017
|
9,423
|
National Pension Trust ("NPT")
2
|
2,759
|
4,332
|
Total
|
199,432
|
166,596
|
1 Self Invested Pensions (SIP)
business, incorporating both SIPP and SSAS products
2 NPT
business was sold on 20th November 2023 (note 3) and so revenue in
the year is up to that date.
5
Finance income and expense
|
Year ended
|
Year
ended
|
|
31 March
|
31
March
|
|
2024
|
2023
|
|
£'000
|
£'000
|
Interest income on bank
deposits
|
50
|
10
|
Finance income
|
50
|
10
|
Interest expense on bank
loans
|
3,629
|
2,758
|
Other costs of borrowing
|
542
|
498
|
Interest on leases
|
323
|
290
|
Other finance expense
|
49
|
50
|
Finance expenses
|
4,543
|
3,596
|
Other costs of borrowing largely
represent the amortisation expense of capitalised loan arrangement
fees on the Group's bank debt.
6
Income tax expense
Recognised in the statement
of comprehensive income
|
Year ended
|
Year
ended
|
|
31 March
|
31
March
|
|
2024
|
2023
|
|
£'000
|
£'000
|
Current tax expense
|
|
|
Current year
|
10,133
|
5,153
|
Adjustment in respect of prior
year
|
(131)
|
(223)
|
Total current tax expense
|
10,002
|
4,930
|
Deferred tax (credit)/expense
|
|
|
Origination and reversal of
temporary differences
|
(2,231)
|
(1,403)
|
Adjustment in respect of prior
year
|
543
|
-
|
Effect of tax rate
changes
|
-
|
(222)
|
Total income tax expense
|
8,314
|
3,305
|
|
Year ended
|
Year
ended
|
|
31 March
|
31
March
|
|
2024
|
2023
|
|
£'000
|
£'000
|
Profit for the year
|
54,167
|
15,837
|
Total tax expense
|
8,314
|
3,305
|
Profit before income tax
|
62,481
|
19,142
|
Tax using the UK corporation tax
rate of 19% (2022: 19%)
|
15,620
|
3,637
|
Non-deductible expenses
|
510
|
74
|
Other operating income not
taxable
|
(23)
|
-
|
Gain on disposal not
taxable
|
(8,135)
|
-
|
Fixed asset differences
|
(70)
|
39
|
Adjustment in respect of prior
periods
|
412
|
(223)
|
Effect of tax rate
change
|
-
|
(222)
|
Total tax expense
|
8,314
|
3,305
|
The standard rate of corporation
tax in the UK was 25% (2023: 19%). The average effective tax rate
was 13% (2023: 17%). The average effective rate in the year is
impacted by the non-taxable gain on sale of the NPT business.
Excluding this, the effective tax rate was 28%. This is higher than
the standard rate due to the impact of costs not allowable for
tax. Deferred tax assets and liabilities
have been measured at the rate they are expected to unwind at,
using a rate substantively enacted at 31 March 2024, which is not
lower than 25% (2023: 19%). Deferred tax not recognised relates to
£6.7 million of finance expense losses in a prior year and their
future recoverability is uncertain. At 31 March 2024 the
total unrecognised deferred tax asset in respect of these losses
was approximately £1.7 million (2023: £1.7 million).
£521,000 (2023: £285,000) of
current year tax, and £1,167,000 (2023: £258,000) of deferred tax
was recognised directly in equity, this relates to employee share
options accounted for under IFRS 2.
7
Loans and borrowings
|
|
|
|
|
|
|
Due within
1 year
(current)
£'000
|
Due
between
1 and 2 years
£'000
|
Due after
2 years
£'000
|
Sub-total
(non-current)
£'000
|
Total
£'000
|
|
31
March 2024
|
Drawn Revolving Credit
Facility
|
-
|
-
|
24,000
|
24,000
|
24,000
|
Capitalised debt arrangement
fees
|
-
|
-
|
(614)
|
(614)
|
(614)
|
Total
|
-
|
-
|
23,386
|
23,386
|
23,386
|
|
|
|
|
|
|
31 March 2023
|
Due
within
1 year
(current)
£'000
|
Due
between
1 and 2
years
£'000
|
Due
after
2 years
£'000
|
Sub-total
(non-current)
£'000
|
Total
£'000
|
Drawn Revolving Credit
Facility
|
-
|
-
|
68,000
|
68,000
|
68,000
|
Capitalised debt arrangement
fees
|
-
|
-
|
(690)
|
(690)
|
(690)
|
Sub-total
|
-
|
-
|
67,310
|
67,310
|
67,310
|
The book value and fair value of
loans and borrowings are not materially different.
Terms and debt repayment
schedule
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
Year of
|
31
March 2024
|
£'000
|
Currency
|
Nominal interest
rate
|
maturity
|
Revolving Credit
Facility
|
24,000
|
GBP
|
1.25% above
SONIA
|
2026
|
|
Amount
|
|
Nominal
interest
|
Year
of
|
31 March 2023
|
£'000
|
Currency
|
rate
|
maturity
|
Revolving Credit
Facility
|
68,000
|
GBP
|
1.85% above
SONIA
|
2025
|
At 31 March 2024 the Group had
drawn down £24,000,000 (2023: £68,000,000) of its £100,000,000
Revolving Credit Facility. The Group's Revolving Facility Agreement
is for £100 million with an accordion of £50 million. This facility
had a 4 year term which started in October 2021. In April 2023, a 1
year extension to the term was agreed, extending it to October
2026. Interest is calculated at a margin above SONIA, subject to a
net leverage test. The related fees for access to the facility are
included in the consolidated statement of comprehensive
income.
Capitalised loan-related costs are
amortised over the life of the loan to which they
relate.
Bank debt is secured by way of
debentures in the Group companies which are obligors to the loans.
These are XPS Pensions Group plc, XPS Consulting (Reading) Limited,
XPS Financing Limited, XPS Reading Limited, XPS Pensions Consulting
Limited, XPS SIPP Services Limited, XPS Holdings Limited, XPS
Pensions Limited, XPS Investment Limited, XPS Administration
Holdings Limited, and XPS Administration Limited. The security is
over all the assets of the companies which are obligors to the
loans.
8
Earnings per share
|
31 March
|
31
March
|
|
2024
|
2023
|
|
£'000
|
£'000
|
Profit for the year
|
54,167
|
15,837
|
|
|
|
|
'000
|
'000
|
Weighted average number of ordinary
shares in issue
|
206,760
|
205,448
|
Diluted weighted average number of
ordinary shares
|
219,621
|
216,071
|
Basic earnings per share
(pence)
|
26.2
|
7.7
|
Diluted earnings per share
(pence)
|
24.7
|
7.3
|
The calculation of basic earnings
per share is based on the earnings attributable to ordinary
shareholders divided by the weighted average number of shares in
issue during the period.
Reconciliation of weighted average
ordinary shares in issue to diluted weighted average ordinary
shares:
|
Year ended
|
Year
ended
|
|
31 March
|
31
March
|
|
2024
|
2023
|
|
'000
|
'000
|
Weighted average number of ordinary
shares in issue
|
206,760
|
205,448
|
Dilutive impact of share options
vested up to exercise date
|
940
|
802
|
Dilutive impact of PSP and SEP
options not yet vested
|
9,226
|
7,920
|
Dilutive impact of dividend yield
shares for PSP and SEP options
|
1,246
|
1,069
|
Dilutive impact of SAYE options not
yet vested
|
1,449
|
832
|
Diluted weighted average number of
ordinary shares
|
219,621
|
216,071
|
Share awards were made to the
Executive Board members and key management personnel in each year
since the year ending 31 March 2017, these are subject to certain
conditions, and each tranche of awards vest 3 years after the award
date. Dividend yield shares relating to these awards will also be
awarded upon vesting of the main awards. Further shares have been
issued under SAYE share schemes in the years ending 31 March 2022
and 2023, these will vest in the years ending 31 March 2025 and
2026 respectively. These shares are reflected in the diluted number
of shares and diluted earnings per share calculations.
Adjusted earnings per
share
|
Total
|
Total
|
|
31 March
|
31
March
|
|
2024
|
2023
|
|
£'000
|
£'000
|
Adjusted profit after
tax
|
33,496
|
27,143
|
Adjusted earnings per share
(pence)
|
16.2
|
13.2
|
Diluted adjusted earnings per share
(pence)
|
15.3
|
12.6
|
9
Dividends
Amounts recognised as
distributions to equity holders of the parent in the
year
|
31 March
|
31
March
|
|
2024
|
2023
|
|
£'000
|
£'000
|
Final dividend for the year ended
31 March 2023: 5.7p per share (2022: 4.8p per share)
|
11,825
|
9,763
|
Interim dividend for the year ended
31 March 2024: 3.0p (2023: 2.7p) per ordinary share was paid
during the year
|
6,200
|
5,568
|
|
18,025
|
15,331
|
The recommended final dividend
payable in respect of the year ended 31 March 2024 is £14.6 million
or 7.0p per share (2023: £11.8 million or 5.7p per
share).
The proposed dividend has not been
accrued as a liability as at 31 March 2024 as it is subject to
approval at the Annual General Meeting.
|
31 March
|
31
March
|
|
2024
|
2023
|
|
£'000
|
£'000
|
Proposed final dividend for year
ended 31 March 2024
|
14,630
|
11,825
|
The Trustee of the Xafinity
Employee Benefit Trust has waived its entitlement to
dividends.
The Company statement of changes in
equity shows that the Company has positive reserves of
£166,081,000. Therefore there are sufficient distributable reserves
in XPS Pensions Group plc in order to pay the proposed final
dividend.