REG - XPS Pensions Group - Final results for the year ended 31 March 2024
20/06/2024 07:00
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RNS Number : 1324T XPS Pensions Group PLC 20 June 2024
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 +44 (0)20 3978 8626
Chief Financial Officer
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
Adjusted((1)) As reported
FY 2024 FY 2023 Change FY 2024 FY 2023 Change
£m £m % £m £m %
Revenue
Pensions Actuarial & Consulting 93.4 77.4 21% 93.4 77.4 21%
Pensions Investment Consulting 20.3 18.0 13% 20.3 18.0 13%
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%)
Total revenue 196.6 162.3 21% 199.4 166.6 20%
EBITDA 54.8 41.4 32% 79.8 35.1 127%
Depreciation & amortisation (5.8) (5.5) (5%) (12.8) (12.4) (3%)
EBIT 1 49.0 35.9 36% 67.0 22.7 195%
Net finance expense (4.5) (3.6) (25%) (4.5) (3.6) (25%)
Profit before tax 44.5 32.3 38% 62.5 19.1 227%
Income tax expense (11.4) (6.0) (90%) (8.3) (3.3) (152%)
Profit after tax 33.1 26.3 26% 54.2 15.8 243%
(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
Non-GAAP cashflow 31 March 2024 31 March 2023
£m £m
Operating
Adjusted EBITDA 55.3 42.4
Change in net working capital (1) 2.4 (0.3)
Adjusted operating cash flow (OCF) (2) 57.7 42.1
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)
Share-related movements (7.7) (1.0)
Net cash flow after financing (12.3) 33.9
Investing
Disposal / (acquisition) 34.5 (8.3)
Capex (7.5) (5.4)
Net cash flow after investing 14.7 20.2
Dividends paid (18.0) (15.3)
Exceptional items - (1.8)
Movement in cash (3.3) 3.1
Net debt (3) 14.0 55.3
Leverage 0.27x 1.38x
(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 31 March 2023
£m £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 31 March 2023
£m £m
Profit from operating activities 67.0 22.7
Depreciation and amortisation 12.8 12.4
Other exceptional and non-trading cash items(2) 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 items(3) 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 31 March 2023
£m £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 31 March 2023
£m £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 purposes(5) (3.0) (2.9)
Pro-forma impact of M&A transactions in year(6) (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 Key mitigations Rationale for change
Risks linked to the assumptions of future development and size of pensions The Board approves and regularly reviews the Group's strategy in conjunction Stable
market used to develop the strategy or business model or business portfolio, with budgets, targeting long-term increases in shareholder value and ensuring
e.g. poor data, group think or lack of diversity of opinions. 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.
Strategic planning and execution
Improving
Description Key mitigations Rationale for change
Risks linked to assessing, evaluating, planning and executing the strategy, The Board regularly reviews the Group's strategy, supported by the Executive XPS has continued to build out its frameworks to design and successfully
e.g. poor budgeting and planning, inadequate or misleading communications or with responsibilities assigned for the delivery of initiatives and provision deliver market-leading innovation and technology change. This continues to be
poor management of change or projects. of regular progress evidenced by the ongoing rollout of the new Aurora administration system.
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.
Financial performance
Improving
Description Key mitigations Rationale for change
Risks relating to the failure to monitor and appropriately manage the The Group has a highly qualified and experienced financial reporting team. The Group has continued to improve its budgeting and forecasting frameworks,
financial performance of the Group on an ongoing basis which could lead to There is an extensive financial controls framework in place and key controls supporting growth. This is evidenced by consistent delivery of financial
poor management decisions, higher costs and/or inaccurate external financial are regularly tested by internal and external audits. The Group undertakes results in line with or ahead of market consensus.
reporting. 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.
Errors
Stable
Description Key mitigations Rationale for change
Risks relating to material mistakes made by staff, including non-compliance The Group recruitment process ensures only high-calibre staff are recruited, Stable
with established procedures, e.g. failure to calculate benefits correctly or who are then supported by training programmes. Staff use standardised
not following peer review processes. These may not crystallise immediately and documented processes and checklists for key
only become apparent a number of years after completion of work. 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.
Theft and fraud (financial and physical assets)
Improving
Description Key mitigations Rationale for change
Risks relating to the safeguarding of Group and client financial and physical The Group deploys robust physical and systems access controls, along with Controls frameworks continue to be developed to manage this risk, addressing
assets from malicious actors, e.g. stealing physical assets, deliberate enforcing segregation of duties to prevent individuals from making fraudulent controls enhancements identified through audits and internal risk
misrepresentation leading to fraud or theft from Group or client bank payments or assessments. We continue to see attempts to impersonate pension scheme
accounts. transfers. members, albeit in small numbers. These attempts are identified and
These controls are supported with staff vetting, training and prevented through the existing controls frameworks.
awareness and control frameworks are regularly independently
audited.
Insurance arrangements are in place to protect against larger claims.
Information/cyber security
Improving
Description Key mitigations Rationale for change
Risks relating to the confidentiality, integrity and availability of The Group has an Information Security Management System (ISMS) in place to The Group has continued to develop its capabilities, recognising the continued
information assets including IT systems, e.g. unauthorised access to or ensure that risks are identified and managed effectively. This includes a evolution of this risk. These activities are supported by regular threat
disclosure of staff or client information, denial of access to systems or data range of technical controls policies and procedures, supported by a dedicated assessments to ensure controls continue to address new and emerging threats.
required or business continuity incidents caused by equipment Cyber Security team, and a 24/7 Security Operations Centre. These are The annual cyber programme plans the implementation of new technical controls
breakdown/fire/flood. supported by regular independent audits and penetration to meet these threats. It also takes into account the findings of regular
tests. penetration and purple team testing. Additional assurance is provided
All staff are provided with through the existing certification frameworks including ISO 27001 and Cyber
comprehensive policies and guidance, with awareness of key topics reinforced Essential Plus certifications and by having appropriate insurance policies in
with a programme of training and testing initiatives, e.g. phishing awareness. place.
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.
Staff/human resources
Stable
Description Key mitigations Rationale for change
Risks relating to The Group's recruitment strategy is to seek professional, experienced and Stable
qualified staff utilising robust staff recruitment and selection processes.
our people, e.g. This is supported by comprehensive training, development and performance
management processes, with longer-term incentives in place to aid retention.
compensation, retention, Regular key staff reviews ensure succession planning is kept up to date and
remains appropriate. Staffing requirements are considered as part of the
succession planning, skills strategy and budgeting process to ensure alignment with business plans.
and competence and
management capability.
Third-party supplier/outsourcing
Stable
Description Key mitigations Rationale for change
Risks relating to the use of third parties to support our operations, e.g. The Group has a formal selection process that ensures due diligence is carried Stable
poor due diligence and selection processes, failure of a supplier to follow out, which is proportionate to the risk of the potential failure
agreed upon procedures or financial failure of supplier resulting in inability of the third party. The approvals and signing framework also ensure
to deliver service. 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.
Client engagement
Stable
Description Key mitigations Rationale for change
Risks relating to the provision of poor service or advice to clients, e.g. The Group client engagement process ensures that expectations are matched to Stable
advice that is not clear, not understood by the client or poorly presented or Group capabilities. Regular ongoing dialogue with clients ensures that the
uses out of date technologies, but not errors. 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.
Business conduct and reputation
Stable
Description Key mitigations Rationale for change
Risks that could lead to a breach of acceptable conduct or ethics, impacting The Group's mission, vision and values clearly set out the tone from the top, Stable
the Group's brand, image or reputation. Failure to ensure services are highlighting to all staff the conduct and ethics that are expected from them
appropriate for client's needs, any discrimination, or a poor response to a at all times. This is supported by a recruitment strategy that seeks
cyber incident or client complaint. 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.
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 Share premium Investment in own shares Accumulated (deficit) / retained earnings Total equity
£'000 £'000 £'000 £'000 £'000
Merger relief reserve
£'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 Year ended
31 March 31 March
2024 2023
£'000 £'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 (http://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 Due Due after Sub-total Total
2 years
(non-current)
1 year (current) between
£'000
1 and 2 years £'000 £'000
£'000
£'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 Due Due after Sub-total Total
1 year
between
2 years
(non-current)
(current)
£'000
1 and 2 years £'000 £'000
£'000
£'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 11,825 9,763
per share)
Interim dividend for the year ended 31 March 2024: 3.0p (2023: 2.7p) per 6,200 5,568
ordinary share was paid during the year
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.
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