REG - XPS Pensions Group - Final results for the year ended 31 March 2025
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RNS Number : 4753N XPS Pensions Group PLC 19 June 2025
19 June 2025
XPS Pensions Group plc
("XPS" or the "Group")
Full year results for the year ended 31 March 2025 ("FY 2025")
Continuing to deliver on growth strategy
Adjusted and excluding NPT((1)) As reported
FY 2025 FY 2024 Change YoY FY 2025 FY 2024 Change YoY
Actuarial and Consulting £106.1m £93.4m 14% £106.1m £93.4m 14%
Investment Consulting £19.4m £20.3m (4%) £19.4m £20.3m (4%)
Total Advisory £125.5m £113.7m 10% £125.5m £113.7m 10%
Administration £93.7m £71.9m 30% £93.7m £71.9m 30%
SIP £12.6m £11.0m 15% £12.6m £11.0m 15%
Total Group Revenue (excl. NPT) £231.8m £196.6m 18% £231.8m £196.6m 18%
NPT((1)) - - - - £2.8m (100%)
Total Group Revenue £231.8m £196.6m 18% £231.8m £199.4m 16%
EBITDA £69.7m £54.8m 27% £58.0m £79.8m (27%)
Profit before tax((2)) £59.5m £44.5m 34% £40.8m £62.5m (35%)
Earnings per share 21.9p 10.3p 113% 14.7p 26.2p (44%)
Fully Diluted EPS((1)) 20.6p 15.1p 36% 13.8p 24.7p (44%)
Net debt £40.3m £14.0m 188% £40.3m £14.0m 188%
Total dividends per share 11.9p 10.0p 19% 11.9p 10.0p 19%
((1) )Adjusted measures exclude the impact of acquisition related
amortisation, share based payments, exceptional costs and the fair value
adjustment to contingent consideration. The prior year figures 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 National Pensions Trust (NPT) business in FY 2024. The net
gain on the disposal of the NPT business was £32.5 million.
STRONG FINANCIAL PERFORMANCE
· Revenue +18% excluding NPT (+17% organic), third consecutive year of
double digit growth driven by continued strong client demand
· Adjusted EBITDA +27% with margin of 30.1% (FY 2024: 27.9%),
benefitting from efficient use of technology such as Aurora and some one-off
impact of higher margin project work
· Advisory revenues grew 10% with Actuarial and Consulting up 14% driven
by continued growth in risk transfer and GMP projects whilst Investment
Consulting revenues were down 4% as activity levels normalised having grown
46% over the previous two years
· Administration revenues grew 30% YoY with GMP, on boarding of new
client wins and one-off McCloud remedy projects contributing to strong growth
· SIP revenues grew 15% with strong underlying sales
· Strong balance sheet supported by highly cash generative platform -
operating cash-flow conversion of 96% (FY 2024: 104%)
· Net debt/adjusted EBITDA((1)) of 0.57x at 31 March 2025 following
Polaris acquisition (31 March 2024: 0.27x) well below target range of 1.0x -
1.5x
· Statutory profit before tax down 35% YoY. Excluding the impact of the
NPT disposal in the prior year, profit before tax was up 36%
· Adjusted diluted EPS((1)) up 36%
· Proposed final dividend of 8.2p resulting in total dividend per share
of 11.9p up 19% YoY - reflecting progressive dividend policy and continued
confidence in the Group's prospects
SUSTAINABLY DELIVERING ON OUR GROWTH STRATEGY:
· Good growth achieved in areas of prior investment, with our technology
driven agility allowing for rapid response to market and regulatory change
producing good outcomes for clients
· Successful delivery on the McCloud project in Administration,
delivering 100% of member statements within our gift by the statutory deadline
- further enhancing our reputation in the market
· Successful onboarding of the John Lewis Partnership pension scheme
administration contract ahead of schedule
· Continued growth in the risk transfer market, including winning
competitive mandates on multi billion-pound pension schemes
· Launch of new Radar functionality to support the "run on versus
buyout" debate
· Transition to our proprietary administration platform Aurora on
target and continues to drive success in winning new appointments, with SEI
Master trust administration on track to go live in H1 FY26
· Profitable growth delivered sustainably, with high satisfaction
scores from our employee survey and awarded 'Best Diversity, Equality and
Inclusion (DEI) Initiative' at the UK Company Culture awards
· Similar high satisfaction in our client survey, with 97% of
clients saying they enjoy working with us
· Strong brand, enhanced by further multiple industry awards -
'Actuarial/Pensions Consultancy of the Year', 'Sponsor Covenant / IRM Adviser
of the Year' and 'Organisational Award: Award for Supporting Development'
· Established a new Insurance Consulting team with multiple senior
hires, building on strong insurer relationships and completed the acquisition
of Polaris Actuaries and Consultants Limited ('Polaris') on 28 February 2025
to expand our service offering and accelerate growth in the £1.5 billion+
insurance consultancy market
Paul Cuff, Co-CEO of XPS Pensions Group, commented:
"We are delighted that for the third year in a row we have achieved really
strong growth and are reporting another excellent set of financial results.
There have been many highlights this year. Our clients have faced many
challenges and opportunities, and we are proud of how well we have looked
after them. In the public sector our work on McCloud was a huge challenge,
but we rose to it and delivered successfully for the members of the schemes we
administer. In this area we are very well placed to help others who have not
yet completed their McCloud projects. In the private sector the backdrop is
of seismic changes taking place as funding level improvements and regulatory
changes create valuable options for our clients, who need good strategic
advice about the best path for them to take. Our strong client survey
results show that we're meeting their needs well too.
We have seen growth in other areas that we have been investing in, and in
particular it has been good to see our risk transfer team go from strength to
strength, advising on a number of the largest deals to come to the market this
year.
Ben Bramhall, Co-CEO of XPS Pensions Group, commented:
"It has been exciting to welcome new colleagues to the Group with the
acquisition of Polaris. The integration is progressing to plan, and we are
pleased with a very positive response from clients and our people. XPS now
has a strong capability to provide support to both pension schemes and
insurance companies in the evolving world that both operate in.
More generally we are really proud of our people and our culture in particular
the strong results of our employee survey and the external awards we have won
in respect of our culture and approach to diversity & inclusion. Our
culture is set by everyone at our firm, and we would like to thank all of our
colleagues for what has been another brilliant year for XPS."
Outlook
Looking ahead, we expect market and regulatory changes will continue to
generate high demand for our services, as will our successful delivery of key
projects that showcase the expertise of our people and the capability of our
platform. With the McCloud work now largely complete, next year's results will
face tough comparators but we still anticipate continued growth, in line with
the Board's recently upgraded expectations. One of our largest administration
clients, John Lewis, has only recently gone live, while migrations to our
Aurora system will continue to drive efficiencies. With workplace pensions
high on the political agenda and the recent tabling of the Pensions Schemes
Bill to parliament, we are also positive on the outlook for the pension fee
market and continue to see a considerable runway of growth in the years ahead.
At the same time, we are excited about the opportunity to diversify into the
closely related insurance consulting sector and are building scale to capture
more of this £1.5 billion market. Together with our core £2.5 billion
pension fee market, we are expanding our addressable end markets to £4.0
billion. Notwithstanding the success of the last few years, we are still
laying the foundations for future growth.
While we do not take the opportunities in front of us for granted, we know
that by continuing to execute well and work hard for our clients, we have a
strategy and platform in place that have a long and growing track record of
delivery. We are confident that we are well placed for further growth in FY
2026 and beyond.
-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
George Grainger
Deutsche Bank (Joint Broker) +44 (0)20 7260 1000
Stuart Skinner
Kevin Cruickshank
Media Enquiries:
Camarco
Gordon Poole +44 (0)20 3757 4980; xps@camarco.co.uk (mailto:xps@camarco.co.uk)
Rosie Driscoll
Phoebe Pugh
Notes to Editors:
XPS Group is a leading consulting and administration business focused on UK
pension schemes and insurers. XPS combines expertise, insight and technology
to address the needs of over 1,300 pension schemes and their sponsoring
employers on an ongoing and project basis, also providing advice and
administration to UK insurance companies. We undertake pensions administration
for c. 1.2 million members and provide advisory services to schemes and
corporate sponsors in respect of schemes of all sizes, including 86 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
Eight consecutive years of revenue growth have transformed our business. Back
in February 2017, we had around 400 people and generated approximately £50
million in revenues and £17 million of EBITDA. Today, we are a leading
provider of advisory and administration services to pension schemes, and
increasingly to insurance companies. Our people number around 2,000, and our
revenues have increased to over £230 million (with EBITDA of £70 million)
and our shares now trade on the FTSE 250. Our FTSE 250 promotion highlights
how far we have come in a relatively short space of time.
A record year of growth
For the year ended 31 March 2025, we are reporting total Group revenues of
£231.8 million, a 16% increase on FY 2024's £199.4 million (FY 2024 as
reported including NPT), or a 18% increase on a like-for-like basis. We have
maintained the step-change in revenue growth from mid-high single digits to
the double-digit rates we have been reporting for the last three years despite
tough comparators. We have continued to grow on a very tough comparator
prior year where we grew revenues by 20%, a testament to how the UK pensions
market and our business model are largely independent of wider macroeconomic
and geopolitical dynamics.
Drivers of strong performance
Major contributors to this year's performance include the high level of demand
for our data cleansing, GMP and risk transfer services alongside new business
wins, and the high-profile McCloud rectification project for our public sector
clients. Other drivers include the inflation linkage of our contracts in line
with standard industry practice as well as market generated tailwinds -
specifically the improving funding position of pension schemes (which means
schemes require advice on the broader range of options available to them) and
further regulatory change.
Operational gearing and profitability
Revenue growth has been generated almost entirely organically and has
comfortably exceeded inflation. For the third consecutive year, XPS has
benefited from operational gearing - earnings growth exceeding that of
revenues. FY 2025 adjusted EBITDA of £69.7 million came in 27% higher than FY
2024's £54.8 million; statutory profit before tax was down 35% to £40.8
million compared to £62.5 million in FY 2024 due to last year's £32.5
million gain on the disposal of the NPT business; while adjusted diluted EPS
grew 36% year on year to 20.6p from 15.1p in FY 2024. This operational
gearing, and margin expansion, is the product of the investment we have made
both in our operating model (to drive efficiencies) and our services where our
focus to ensure we can deliver what our clients and the wider market needs is
resulting in growth in higher margin project work. Even after normalising
for the one-off impact of some of this higher margin project work, margin
improved in-line with our plan.
Balance sheet strength and dividend growth
As at year end, Group leverage stood at 0.57x even after funding the initial
£23.0 million cash consideration for the Polaris acquisition, and well below
our medium-term leverage target of 1.0-1.5x. Our strong balance sheet allows
us to propose a 19% increase in the total dividend for the year in line with
our progressive dividend policy alongside demonstrating continued confidence
in the Group's prospects.
Actuarial and Consulting: navigating a changing market
At the divisional level, Actuarial and Consulting, our biggest division,
increased revenues 14% to £106.1 million (FY 2024: £93.4 million) due to a
combination of strong client demand and the expansion of our offering. The
switch from a low- to a high-interest rate/inflationary environment continues
to drive client demand for advice on how best to navigate the new macro
backdrop and whether new strategies, such as de-risking, ought to be adopted.
During the year, Actuarial and Consulting won significant new business on risk
transfer mandates (helping clients to de-risk by engaging with insurers on
bulk annuity transactions), including work from outside our own client base.
An increasing number of clients are also seeking advice on whether strategies
to "run on for surplus" might be a better long-term strategy for them.
Administration: Delivering growth and innovation
Administration, our next largest division, posted the strongest year on year
growth rate. Revenues were up 30% to £93.7 million (FY 2024: £71.9 million)
thanks to GMP equalisation and McCloud judgement rectification work, new
client wins and the lagged impact of annual price increases implemented at
times of higher inflation. As at 31 March 2025, the number of members under
administration stood at around 1.2 million, a year-on-year increase of 9%.
We were pleased to successfully onboard the administration of the John Lewis
Partnership pension scheme, which went live slightly ahead of schedule in
February 2025.
Administration also benefited from the successful roll out of Aurora, our
proprietary administration system. During the year, we moved around 300,000
members onto Aurora. Aurora, which leverages cloud-based technology, is a win
for both members and XPS. Members benefit from a more efficient digital system
and online access. XPS benefits from being able to turn off legacy systems,
capture efficiency gains and provide a better service to clients. Among the
members now administered using Aurora are the 67,000 members of the National
Pension Trust, the master trust we sold to SEI in November 2023 but where we
retained the role of administrator. During the year we won an expanded role
with SEI, as the administrator to its wider master trust that NPT is merging
into. This will go live during FY 2026.
Investment Consulting: Solidifying gains
Investment Consulting is the only one of our divisions to have recorded a
small 4% year on year decline in revenues to £19.4 million (FY 2024: £20.3
million). The decline was expected as demand normalised following 46% growth
in the previous two years. This growth, which was triggered in part by the
autumn 2022 gilt market crisis, was centred around increased demand for
portfolio rebalancing work and hedging strategy reviews along with the award
of mandates for the independent oversight of fiduciary managers. We are very
pleased with the division's performance over the past three years and we see
attractive opportunities for Investment Consulting to take market share in the
years ahead. For example, expensive fiduciary management solutions targeting
higher returns may no longer be attractive as schemes have become better
funded. Instead, a high quality traditional investment consulting approach -
which our Investment Consulting division offers at a much lower cost, may be
more appropriate.
SIP: Organic growth and new partnerships
Finally, SIP revenues were up 15% to £12.6 million (FY 2024: £11.0 million).
All of the growth was generated organically as a result of strong new business
sales (supported by our inclusion on the panel of recommended SIPP providers
for St James's Place, one of the UK's leading financial advisers), alongside
higher interest on cash deposits, which we partially share with our clients.
Buoyant end markets
Our good revenue growth is down to several factors. The pensions industry is
being driven, as always, by regulatory and market change which, in turn,
drives demand for our services. As has so often been the case in the last
three decades, new regulations continue to come into force, for example: the
Pension Schemes Act 2021, relating to how corporates finance their
arrangements and how schemes are treated following M&A; the 2018 GMP
equalisation ruling, requiring trustees to correct the unequal treatment of
men and women in relation to elements of defined benefit schemes that built up
in the 1980s/1990s; and the CMA Review which recommended schemes seek
independent advice on fund managers engaged on a fiduciary management basis.
2024 saw further change with the new Funding Code, and the most recent
regulatory change has been a new Pensions Bill laid before Parliament in June
2025, which among other things makes the option to extract surplus much easier
for defined benefit pension schemes.
As is often the case with new regulations, schemes will require tailored
advice over a number of years to understand how the change affects their
members and how best to respond.
Market-driven change also leads to multi-year work, particularly when a
fundamental shift has taken place. The switch from a low- to a high-interest
rate environment is one such shift that has resulted in many defined benefit
pensions schemes moving from deficits to surpluses. While this is good news
for the schemes, they now require advice on what to do with these surpluses.
Should these be locked in? Should the scheme de-risk and transfer its
liabilities to insurers? More pension schemes are choosing the de-risk option
which is fuelling growth in the bulk annuities market where insurance
companies take on the liabilities of pension schemes. As well as generating
multi-year work for our Risk Transfer team, this is also leading to increased
demand from insurers for advice and support to manage their enlarged books,
thereby opening up further growth opportunities for us. The recent Pensions
Bill opens up another avenue too - should schemes "run on for surplus", rather
than moving to an insurer? Our clients need advice on what is best for them,
and schemes that do run on will need a lot of support to do this effectively
for many years to come.
The pension fee industry is benefiting from multiple long-term drivers, both
regulatory and market related. Whilst the increase in risk transfer work is
reducing the number of schemes, the increased activity levels mean we expect
our markets to see continued growth in the years ahead.
Proven strategy and committed people
On their own buoyant markets are not enough to deliver consistently strong
financial results. A strategy is required to capture the growth opportunities
presented. We have a comprehensive strategy in place that has been designed to
do this, centred around four pillars:
· Regulatory change as a driver of activity;
· Growing market share;
· Growth through expanding services; and
· Growth through M&A.
Having the right strategy, though, is only one half of the equation. Having
the right people to execute is the other.
Our people are the reason behind our success. Without them we would not
deliver highly complex projects on time and on budget, achieve major
milestones, such as joining the FTSE 250, announce record results or be named
Pensions and Actuarial Consulting Firm of the Year at the Professional
Pensions Awards for the third time in five years and Employer Covenant Advisor
of the Year at the same ceremony. Our people not only go the extra mile with
their work but also for their colleagues and the communities in which we
operate. Each year our Values in Practice Awards serve to showcase the
contributions our people make both inside and outside the office, including
volunteer work in their local communities. To show our appreciation of our
people's efforts over the course of the year, we awarded all employees a
voucher, outside of and in addition to the usual bonus pool, to enjoy a great
experience of their choosing with their families and friends.
As a Group, we must deliver for our people consistently over the long term by
creating a working environment where everyone feels valued and able to
flourish. We were delighted to receive the Business Culture Builder Award and
Best Working Environment and Practices Initiative Award at the Business
Culture Awards 2024. We are also encouraged by the high Net Promoter Score
(+24 last year) we continue to receive from our employees. Also, our net
employee churn remains very low. We know that we must continue to work hard to
foster a positive culture at XPS. Not only is this the right thing to do, but
it makes business sense too. A positive culture helps retain individuals and
attracts talent and leads to better outcomes for clients and, in turn, strong
business performance.
Investing in our platform
If our people have been key to our success, our ongoing commitment to give our
people the tools they need to deliver by investing in technology and in our
offering has been the enabler. As the results we are reporting today show, we
are reaping the benefits of the investments we have made to become a
full-service solutions provider to the pensions industry. The operational
gearing we have now enjoyed for three successive years reflects this.
Our commitment to investing in our technology, people and services is ongoing
and during the year ended 31 March 2025 we continued to invest in new
technologies and systems. For example, we developed our Radar platform to help
clients understand their options and enable informed decisions to be made on
whether a scheme ought to run on or de-risk. We continue to invest in AI and
are already seeing promising results from a pilot project focused on improving
the efficiency of our Member Connect centre in our administration division.
Our investments in specifically trained large language models are also bearing
fruit.
Delivering complex projects
The platform we have built, and continue to invest in, has allowed us to take
on large and complex projects, some of which are high priority and high
profile. Delivering these projects on time and on budget, particularly when
competitors have struggled to do so, will stand us in good stead to continue
to win new business and increase our market share.
One high-profile project we successfully delivered during the year was
rectification work in relation to the McCloud judgement. After reforming
public service pension schemes in 2014 and 2015, the government introduced
transitional protections for older members. However, in December 2018, the
Court of Appeal ruled that younger members of the judicial and firefighters'
pension schemes had been unlawfully discriminated against because the
protections did not apply to them. The McCloud Remedy is a series of changes
to public service pension schemes in the UK designed to address age
discrimination identified in the McCloud judgment.
Put simply, pensions needed to be put back to where they would have been had
the changes not been made, a complex task. Years of data regarding historical
earnings for thousands of affected members are required. A series of
calculations is needed to work out what members should have received and then
verified against multiple different calculations. Foregone interest also needs
to be calculated and added into the settlement, while further adjustments may
have to be made if the settlement pushes members into a higher tax bracket.
Other considerations, such as health benefits, must be taken into account too.
Accurately calculating a remedy for one affected individual is challenging
enough, but in relation to the immediate choice review for members who retired
prior to October 2023, we committed to completing more than 38,000 cases by
the end of March 2025. Thanks to the incredible efforts of our people and the
investment we made in our Aurora technology platform, we delivered for every
single member where it was within our control to do so. This equates to 90% of
in-scope retired members, the outstanding 10% relates to individuals where
complete data sets were not available or where guidance from an external party
(such as HMRC and /or the Government Actuary) was required. Across all
categories of members, so including active, deferred, and retired members, we
produced more than 60,000 statements, covering 94% of members due a remediable
service statement. In addition, a further 3,000 statements were issued for
non-XPS administered clients, where we were approached to provide wider
assistance. We believe we are, if not the only administrator, one of only a
very small number to have met the deadline for such a high-profile project. We
are confident this will open up opportunities for new client wins, not just in
relation to McCloud but ongoing administrator work for clients attracted to
the robust and scalable systems that we have clearly demonstrated sit within
XPS. McCloud itself may be one-off, but our successful delivery of the
project, and others like it, augurs well for future business wins.
Diversifying into adjacent markets
We are also investing to increase our capabilities to capitalise on the
growing overlap between the pensions and insurance industries. We have set up
a dedicated Insurance Consulting team to support insurers taking on large
pension schemes via the bulk annuities market and more widely. As with
pension schemes, insurers require support, specifically in areas such as
financial reporting around reserving and risk management around data
architecture - services we already provide to pensions schemes. To head this
team and drive it forward, we appointed David Honour, previously a senior
partner in insurance consulting at PwC. At the end of February, we acquired
insurance consulting firm Polaris Actuaries and Consultants.
Polaris has been integrated into the current XPS Insurance Consulting team,
which is focused on high impact, strategic advice, consulting on
transformational change at the initiation stage of large scale projects.
Polaris specialises in using a flexible workforce to lead the delivery stages
of such projects, and as such is a highly complementary business. The
combination will create a significant opportunity for growth as XPS will now
be able to offer a full range of services from a strategic consultancy at the
front end through to on-the-ground implementation. Polaris also offers XPS
the advantage of immediate access to long term, trusted relationships with
established Master Services Agreements with majority of the UK's leading
insurers.
Just as we did with the pension fee market, we are building capability and
scale in the insurance fee market and in the process adding another growth
pathway to the business.
A responsible business
As a Group, we are focused on growing responsibly. We continue to have high
satisfaction scores from our employee survey, and were awarded 'Best
Diversity, Equality and Inclusion (DEI) Initiative' at the UK Company Culture
awards. We continue to work towards achieving a significant reduction in our
direct carbon footprint and are aiming to source 100% of our electricity from
renewable sources by 2030.
Outlook
Looking ahead, we expect market and regulatory changes will continue to
generate high demand for our services, as will our successful delivery of key
projects that showcase the expertise of our people and the capability of our
platform. With the McCloud work now largely complete, next year's results will
face tough comparators but we still anticipate continued growth, in line with
the Board's recently upgraded expectations. One of our largest administration
clients, John Lewis, has only recently gone live, while migrations to our
Aurora system will continue to drive efficiencies. With workplace pensions
high on the political agenda and the recent tabling of the Pensions Schemes
Bill to parliament, we are also positive on the outlook for the pension fee
market and continue to see a considerable runway of growth in the years ahead.
At the same time, we are excited about the opportunity to diversify into the
closely related insurance consulting sector and are building scale to capture
more of this £1.5 billion market. Together with our core £2.5 billion
pension fee market, we are expanding our addressable end markets to £4.0
billion. Notwithstanding the success of the last few years, we are still
laying the foundations for future growth.
While we do not take the opportunities in front of us for granted, we know
that by continuing to execute well and work hard for our clients, we have a
strategy and platform in place that have a long and growing track record of
delivery. We are confident that we are well placed for further growth in FY
2026 and beyond.
Paul
Cuff
Ben Bramhall
Co-Chief Executive Officer
Co-Chief
Executive Officer
18 June 2025
18 June 2025
FINANCIAL REVIEW
It has been another strong year for the Group, with revenue growing by 18% and
adjusted EBITDA growing 27% year on year. The Administration business has
performed particularly well, alongside strong performances within Actuarial
and Consulting and SIP. The Investment business has shown a small decline,
which had been expected following strong growth in prior years partially
driven by the LDI crisis. The Group's operational gearing continues to
improve, with adjusted diluted EPS and adjusted EBITDA growth exceeding
revenue growth for the third year in a row. We made a strategic acquisition
in the year of Polaris Actuaries and Consultants Ltd, which will accelerate
growth into the insurance consulting market. We continue to develop and roll
out our own administration platform - Aurora, which is starting to contribute
to our operational gearing, and will continue to do so in the future.
Group income statement
Adjusted(1) As reported
FY 2025 FY 2024 Change FY 2025 FY 2024 Change
£m £m % £m £m %
Revenue
Actuarial & Consulting 106.1 93.4 14% 106.1 93.4 14%
Investment Consulting 19.4 20.3 (4%) 19.4 20.3 (4%)
Total advisory 125.5 113.7 10% 125.5 113.7 10%
Administration 93.7 71.9 30% 93.7 71.9 30%
SIP 12.6 11.0 15% 12.6 11.0 15%
NPT - - - - 2.8 (100%)
Total revenue 231.8 196.6 18% 231.8 199.4 16%
EBITDA 69.7 54.8 27% 58.0 79.8 (27%)
Depreciation & amortisation (6.8) (5.8) (17%) (13.8) (12.8) (8%)
EBIT 1 62.9 49.0 28% 44.2 67.0 (34%)
Net finance expense (3.4) (4.5) 24% (3.4) (4.5) 24%
Profit before tax 59.5 44.5 34% 40.8 62.5 (35%)
Income tax expense (14.4) (11.4) (26%) (10.4) (8.3) (25%)
Profit after tax 45.1 33.1 36% 30.4 54.2 (44%)
(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. In FY 2024 they also
exclude the Group's NPT business, which was sold in November 2023, and the
related gain on disposal. See note 2 for details of exceptional and
non-trading items, and table one of the appendix to this report for the prior
year reconciliation to exclude the NPT business.
Revenue
Total Group revenues grew 16% year on year. Excluding NPT which was sold in
November 2023, Group revenues grew 18% year on year.
Advisory had another strong year with 10% year on year growth in revenues.
Within that, Actuarial & Consulting achieved 14% year on year growth in
revenues, due to high client activity levels driven by continued regulatory
changes, demand for our risk transfer and GMP services as well as other
project work, and inflationary increases in fees.
Investment Consulting showed a decrease of 4% year on year, due to the
normalisation of activity levels after two years of very strong growth in
which revenues had grown 46%.
Administration revenues grew 30% year on year with the onboarding of a large
new first-time outsource client and high levels of project work, such as GMP
equalisation and the McCloud judgement rectification. Inflationary increases
in fees also helped to drive the growth in the year. Administration accounted
for 40% of the Group revenues (FY 2024: 36%). The McCloud remedy project
contributed to significant growth this year and with the passing of the
statutory deadline of 31 March 2025 for the majority of the remedy work to be
completed, we will be lapping tough comparators next year.
SIP revenues were up 15% on the prior year, due to strong underlying sales and
our placement on the St James's Place panel.
Operating costs
Total operating costs (excluding exceptional and non-trading items) of £168.9
million (FY 2024: £147.6 million)(1) grew by 14% year on year. The main
drivers for the cost increases are an increase in headcount as the business
grew (1,901 FTE vs. 1,712 last year), inflationary/market-driven pay
increases, higher bonus cost commensurate with the strong financial
performance, investment in Insurance Consulting and inflationary increases in
other operating costs.
Adjusted EBITDA
Despite another year of inflationary pressures on our costs, the Group has
delivered further operational gearing with adjusted EBITDA growing by 27% year
on year - ahead of the Group adjusted revenue growth of 18%. Adjusted EBITDA
margin was 30.1% (FY 2024: 27.9%). The margin improvement has been delivered
through a mix of business effect including higher risk transfer activity and
the one-off McCloud remedy project which was delivered very efficiently
through the use of our proprietary administration platform Aurora, as well as
disciplined cost management. After normalising for the one-off impact of some
of this higher margin project work, profit margin improved in-line with our
plan, and we expect this improvement to continue going forward.
Adjusted profit before tax grew by 34% year on year benefiting from the strong
revenue growth and continued operational gearing.
Exceptional and non-trading items
Exceptional and non-trading items in the year totalled £18.7 million (FY
2024: £15.0 million excluding the gain on sale of NPT). Amortisation of
acquired intangible assets amounted to £7.0 million (FY 2024: £7.0 million).
Share-based payment charges were £8.8 million (FY 2024: £6.4 million) with a
higher National Insurance charge resulting from the Group's strong share
price, and the increase in employer's National Insurance due to take effect
from April 2025.
The Group also incurred corporate transaction costs of £1.8 million in the
year, £1.2 million of acquisition-related remuneration in respect of the
acquisition of Penfida Limited, and £0.9 million of acquisition-related
remuneration related to the Polaris acquisition (FY 2024: acquisition-related
remuneration of £1.7 million in relation to the acquisition of Penfida
Limited). All acquisition-related remuneration relating to Penfida has now
been paid, following the second anniversary of the acquisition in September
2024. £9.2 million of the cash upon completion relating to Polaris included a
continuing employment clause, as does the further payment of up to £35
million payable in three years' time, which is also contingent upon
achievement of certain stretching business objectives. As continued employment
is one part of the contingent consideration test, according to IFRS 3, these
amounts must be treated as a post-transaction employment cost accruing over
the deferment period of three years. An amount, therefore, has been recognised
in FY 2025 representing the acquisition-related remuneration expensed in the
year. These amounts are material in size and one-off in nature and will
continue to be for the next three years. These amounts will continue to be
classified within the exceptional category in line with the Group's accounting
policies. If the entire contingent acquisition-related remuneration is not
payable at the end of the three-year period, any resulting credit will also
flow through the exceptional category.
Due to the treatment under IFRS 3 discussed above for a large element of the
consideration for the acquisition of Polaris, the accounting consideration was
significantly smaller than the cash paid and expected cash outflow of the
payment due in three years. As a result, a gain on purchase has been
recognised in the year of £1.0 million. This credit arises directly from the
Polaris acquisition and does not reflect the performance of the Group.
Accordingly, under the Group's accounting policies, this has been classified
as an exceptional item.
Tax on the non-trading items was a credit of £3.9 million (FY 2024: £3.2
million). This is driven by the unwinding of deferred tax liabilities linked
to intangible assets acquired in previous periods, and tax relating to
share-based payments.
The prior year figures include an exceptional gain of £34.6 million on the
disposal of the NPT business, which was sold in November 2023. The exceptional
gain was offset by related corporate transaction fees of £2.1 million in the
year.
Net finance costs
Net finance costs for the year were £3.4 million (FY 2024: £4.5 million).
The decrease is due to the significantly lower loan balance throughout most of
FY 2025 compared to the prior year - the loan balance was significantly
reduced in November 2023 following the sale of the NPT business and remained
at a lower level until February 2025.
Taxation
A tax charge of £14.3 million (FY 2024: £11.5 million) was recognised on
adjusted profits. This represents an effective tax rate of 24% (FY 2024: 26%).
The Group also recognised a tax credit of £3.9 million (FY 2024: £3.2
million) on exceptional and non-trading items, which resulted in an overall
tax charge for the year of £10.4 million (FY 2024: £8.3 million). The strong
performance in trading drove the increase in tax charges in the year compared
to the prior year.
Our businesses continue to generate considerable tax revenue for the UK
government. For the year ended 31 March 2025, we paid corporation tax of
£11.2 million (FY 2024: £11.3 million); we collected employment taxes of
£36.5 million (FY 2024: £32.1 million) and VAT of £36.9 million (FY 2024:
£31.9 million). Additionally, we have paid £1.3 million (FY 2024: £1.3
million) in business rates. The total tax contribution of the Group was,
therefore, £85.9 million (FY 2024: £76.6 million), which equates to 37% of
revenue (FY 2024: 38%).
EPS
Basic EPS for FY 2025 decreased by 44% year on year to 14.7p (FY 2024: 26.2p)
- the decrease is due to the gain on disposal of NPT in the prior year.
Basic EPS for the prior year excluding the gain on disposal of the NPT
business was 10.5p which gives growth in the year of 40%.
Adjusted fully diluted EPS grew 36% year on year to 20.6p in FY 2025 (FY 2024:
15.1p), driven by strong revenue growth as well as continuing delivery of
operational gearing in the business.
Dividend
A final dividend of 8.2p is being proposed by the Board (FY 2024: 7.0p). The
final dividend, which amounts to £17.0 million (FY 2024: £14.6 million),
will be paid on 22 September 2025 to those shareholders on the register on 22
August 2025.
Cash flow, capital expenditure and financing
Non-GAAP cashflow 31 March 2025 31 March 2024
£m £m
Operating
Adjusted EBITDA 69.7 55.3
Change in net working capital (1) (3.0) 2.4
Adjusted operating cash flow (OCF) (2) 66.7 57.7
OCF conversion 96% 104%
Financing & tax
Net finance expense (3.5) (4.3)
Taxes paid (11.2) (11.3)
Proceeds from/(repayment of) loans 31.0 (44.0)
Repayment of lease liabilities (2.0) (2.7)
Share-related movements (19.7) (7.7)
Net cash flow after financing 61.3 (12.3)
Investing
(Acquisition) / disposal (24.1) 34.5
Capex (8.2) (7.5)
Net cash flow after investing 29.0 14.7
Dividends paid (22.2) (18.0)
Exceptional items (2.1) -
Movement in cash 4.7 (3.3)
Net debt (3) 40.3 14.0
Leverage 0.57x 0.27x
(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 22 to the consolidated financial statements
for a reconciliation of this figure.
The Group has demonstrated strong cash management in the year. Adjusted
operating cash flow increased by £9.0 million, driven by a £14.4 million
increase in adjusted EBITDA offset with a £5.4 million decrease in net
working capital year on year. This decrease was expected due to the timing of
billing in the year and the prior year on project work. Overall, this resulted
in adjusted operating cash flow conversion of 96% compared to 104% in the
prior year.
Taxes paid in the year of £11.2 million (FY 2024: £11.3 million) were lower
than the prior year, due to tax adjustments for prior years computed during
the year.
During the year, the Group drew down £31.0 million of the revolving credit
facility (RCF), predominantly to fund the acquisition of Polaris Actuaries and
Consultants Limited (FY 2024: repayment of £44.0 million). Interest paid on
the loan balance amounted to £2.3 million (FY 2024: £3.9 million), £0.3
million was paid on interest relating to leases in the year (FY 2024: £0.3
million), and loan arrangement fees paid amounted to £1.0 million (FY 2024:
£0.2 million). Offsetting this was £0.1 million of interest income received
(FY 2024 £0.1 million). Capital expenditure in the year amounted to £8.2
million (FY 2024: £7.5 million) with £2.1 million spent on leasehold
improvements and office fit-outs and the remaining £6.1 million on software
development, enhancements to our platforms, cyber security, and other IT
equipment. £2.0 million relating to leases was paid in the year (FY 2024:
£2.7 million).
In February 2025 the Group acquired Polaris Actuaries and Consultants Limited
for cash consideration of £13.8 million and prepaid acquisition-related
remuneration of £9.2 million. A further amount of up to £35 million is due
to be paid in three years' time, which is payable contingent upon achieving
stretching business targets as well as continued employment. Due to the
continuing employment clause, under IFRS 3 this amount has been treated as
acquisition-related remuneration. £1.1 million of costs relating to the
Penfida acquisition in a previous year were also paid in the year. 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 £18.7 million (FY 2024: £5.6 million) on acquiring its own
shares via its EBT, to be used to settle employee share options as they vest.
£0.6 million (FY 2024: £0.6 million) was paid to employees as dividend
equivalents on the vesting of share options as well as incurring £1.3 million
of employer's National Insurance (FY 2024: £1.5 million). Offsetting this was
£0.9 million of cash received from employees on the exercise of SAYE options.
After paying £22.2 million in dividends, and £2.1 million in exceptional
costs relating to the Polaris acquisition, the Group cash balance increased by
£4.7 million year on year to close at £14.7 million. The Group had drawn
down £55.0 million of its £120 million RCF at 31 March 2025, resulting in
net debt of £40.3 million, an increase of £26.3 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 33 in
the Annual Report.
Snehal Shah
Chief Financial Officer
18 June 2025
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 excluding the NPT business 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.
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 the 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 2025 31 March 2024
£m £m
Profit from operating activities 44.2 67.0
Depreciation and amortisation 13.8 12.8
Gain on disposal of NPT business - (32.5)
Other exceptional and non-trading items 11.7 8.0
Adjusted EBITDA excluding gain on disposal of NPT business 69.7 55.3
Trading EBITDA in respect of NPT business - (0.5)
Adjusted EBITDA excluding NPT 69.7 54.8
2. OCF conversion
31 March 2025 31 March 2024
£m £m
Profit from operating activities 44.2 67.0
Depreciation and amortisation 13.8 12.8
Other exceptional and non-trading cash items(1) 11.7 8.0
Gain on disposal of NPT business - (32.5)
Trading EBITDA 69.7 55.3
Net cash from operating activities 41.8 42.9
Income tax paid 11.2 11.3
Cash exceptional and non-trading items(2) 13.7 3.5
Adjusted operating cash flow 66.7 57.7
OCF conversion 96% 104%
3. Adjusted diluted EPS excluding NPT
31 March 2025 31 March 2024
£m £m
Profit after tax and total comprehensive income for the year 30.3 54.2
Adjustment for exceptional and non-trading items (net of tax)(1) 14.8 (20.7)
Profit after tax from operating activities for NPT business - (0.4)
Adjusted profit after tax excluding NPT 45.1 33.1
Dilutive weighted average number of shares ('000) 219,437 219,621
Adjusted diluted EPS excluding NPT (pence) 20.6 15.1
4. Leverage
31 March 2025 31 March 2024
£m £m
Cash and cash equivalents 14.7 10.0
Bank debt (55.0) (24.0)
Contingent consideration - -
Net debt(3) (40.3) (14.0)
Trading EBITDA 69.7 55.3
Impact of IFRS 16 ignored for bank covenants purposes(4) (3.3) (3.0)
Pro-forma impact of M&A transactions in year(5) 4.5 (0.5)
Adjusted EBITDA for covenant 70.9 51.8
Leverage 0.57x 0.27x
1 See note 2.
2 This is the cash element of exceptional and non-trading items: National
Insurance on share-based payments (note 12 of the consolidated financial
statements), the prepaid Polaris consideration of £9.2 million and
transaction costs relating to the Polaris acquisition in note 3 (FY 2024:
National Insurance on share-based payments, and transaction costs relating to
the NPT disposal).
3 See note 22 of the consolidated financial statements.
4 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.
5 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
2025 adjustment is to reflect the Polaris acquisition taking place on 1 April
2024 (i.e. it includes Polaris for the whole 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).
Principal Risks and Uncertainties
Managing risk effectively
The Group deploys a comprehensive risk management and internal control
framework, enabling it to identify and manage risk proactively, supporting the
growth of the business. Effective risk management provides the Group with
fully articulated risks, enabling it to identify and embrace opportunity. XPS
Group is inherently exposed to a wide range of risks which, should they
materialise, could have a material impact on its financial performance,
reputation or operational resilience.
Risk management highlights
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 our day-to-day operations, alongside supporting new opportunities
and initiatives. The Group's risk environment is regularly reviewed by senior
management alongside the internal control 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:
· Reviewing existing risk and controls frameworks and assessments,
taking into account the introduction of Provision 29 in the UK Corporate
Governance Code. This includes workshops with senior management to review
critical risks and identify material controls and developing the frameworks
supporting these areas.
· Actively engaging with key change management programmes to ensure
they effectively identify and manage key risks to the Group, as well as fully
recognising potential opportunities.
· Supporting new initiatives, such as the adoption of Artificial
Intelligence, highlighting the threats and opportunities and ensuring that
they are being managed appropriately.
· Development of the existing incident management frameworks to
support the Group's ability to effectively respond to a significant cyber
event. This includes developing the existing supporting documentation (BC
plans, IT runbooks and incident-specific playbooks) and testing these up to,
and including, Board level. We were also able to support our clients through
a number of well received webinars on these topics.
· Continuing to develop the existing Risk team and its
capabilities, through supporting staff to develop into subject matter experts
in their areas, alongside cross training to allow holistic risk management
across multiple domains.
· Enhancing the existing fraud prevention framework and fraud risk
assessment in light of the "failure to prevent fraud" aspect of the Economic
Crime and Transparency Act with support from external consultants. This
includes developing a comprehensive view of fraud risk exposures across each
business area and central functions.
Risk Management Framework
Our Risk Management Framework (RMF) supports our Group-wide approach to risk
management. This RMF is made up of several key components, providing clear
governance and an effective risk management process that is supported by
systems and consistent risk culture across the Group.
Risk strategy
XPS recognises the need to take risks to help its customers to achieve their
objectives and achieve commercial success. We will seek to take risks where we
have the skills to exploit that risk and manage it within risk appetite and
avoid and minimise risks where it is unrewarded, or it cannot be well managed
or understood.
Risk governance and three lines of defence
The Board of Directors has the ultimate responsibility for risk management and
internal control, including for the determination of the nature and extent of
the critical risks it is willing to take to achieve its strategic objectives.
The Group has established a committee governance structure at both the Board
and management levels to provide oversight and challenge on the implementation
of the policy and framework across all areas and risk types within the Group.
The Group also applies the principles of the three lines of defence model in
its risk management approach.
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 same sector as the
Group. 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.
Risk management process
XPS uses an iterative risk management process (risk identification, risk
assessment, risk treatment, monitoring and reporting) to help business areas
and central functions actively manage all risks across the Group.
Risk register
The risk register incorporates a top-down Group risk register focusing on
critical risks faced at the Group level, and bottom-up registers, including
risk registers for each business area and central function and a specialist
risk register, which allow deep dives into a particular risk type.
Update on principal risks
Principal risks are defined as those risks that we determine to be 'critical'
to XPS as a business across the four pillars referenced in the updated
Corporate Governance Code: operational, compliance, financial and reporting.
These risks are owned and managed by a member of the senior executive team or
senior management who has accountability for ensuring that the risk is
effectively managed.
We recognised that it is good practice to regularly review our principal risk
profile to ensure its relevance and in line with our strategies. Recently, the
Board reviewed the principal risks in response to the introduction of
Provision 29 in the UK Corporate Governance Code with the support of external
advisors. The review focuses on identifying risks that are critical to XPS as
a business, supporting a risk focused approach to identifying material
controls.
The principal risks and uncertainties are detailed below. We disclose links
to strategy, mitigating actions, updates for this year and key focuses for FY
2026 to manage the risk and improve internal control for each risk.
Regulatory and legislative non-compliance
Link to strategy Trend
Regulatory change Stable
Description
Failure to comply with regulatory requirements could result in regulatory
penalties, reputational damage, and potential operational disruption (e.g.
loss of licence to operate). The evolving regulatory landscape and changes in
legislation exacerbates non-compliance risk. Critical regulatory compliance
areas include:
• Financial Conduct Authority (FCA).
• Market Abuse Regulations (MAR).
• Anti Money Laundering (AML).
• Occupational health & safety requirements.
Update
This risk remains unchanged from the prior year. We continue to monitor
regulatory reporting and regulatory change.
Key mitigating action
· Horizon scanning to ensure that regulatory changes are interpreted
correctly and responded to in a timely and adequate manner.
· Use of Insidetrack system to automatically manage insider list.
· Bespoke training on MAR responsibilities.
· Annual financial crime training for all staff and bespoke training
for regulated businesses.
· Review between finance and risk to ensure that reports to the FCA
are accurate.
Focus for FY 2026
Alongside the continuation of our existing key mitigating actions we will:
· Continue with our ongoing training programme on key compliance
areas.
· Continue to enhance controls relating to AML reviews.
Client service delivery errors & claims
Link to strategy Trend
Expand services Improving
Grow market share
Description
New or historic errors in client service delivery, both advice provided to
clients or in pension administration, could result in legal claims, financial
liabilities, reputational damage and loss of clients. Errors could be caused
by staff, systems, processes or oversight issues.
Update
This risk remains unchanged from the prior year.
Key mitigating action
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. There are
also built-in controls in key business systems and authorisation processes for
major transactions that require checks and sign-offs from senior members of
the team. Insurance arrangements are in place to limit the loss should an
error occur. Root cause analysis is used to identify where control
improvements are required, which are monitored through to implementation.
Focus for FY 2026
Alongside the continuation of our existing key mitigating actions we will:
· Continue the enhancement of the root cause analysis as part of the
claims management process.
· Continue to increase the coverage of automated controls embedded
in systems.
· Continue to ensure that there are authorisation processes in place
where manual checks are a substitute for system built-in controls.
Critical systems and disruption
Link to strategy Trend
Expand services Stable
Description
Disruption to critical systems may arise from cyber-attacks, internal system
failures, or third-party service disruptions. This disruption could lead to
operational disruption, loss or theft of confidential data, increased costs
for resolution efforts, regulatory penalties, reputational damage and loss of
clients.
Update
This risk remains unchanged from the prior year. We will continue to monitor
any potential threats to critical systems, especially cyber-attacks.
Additional assurance is provided through the existing Cyber Essential
Plus certifications and by having appropriate insurance policies in place.
Key mitigating action
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 co-ordinate
and communicate with stakeholders in the case of a significant incident.
Focus for FY 2026
Alongside the continuation of our existing key mitigating actions we will:
· Continue to engage in threat intelligence by identifying the tactics,
techniques and procedures that threat actors use to cause disruption.
Sensitive data breach
Link to strategy Trend
Expand services Stable
Description
A sensitive data breach may result from cyber-attacks, internal system
vulnerabilities, process failures, or third-party breaches. This includes
non-compliance with data protection regulations (including GDPR) in
collecting, processing, storing, or using sensitive data. A sensitive data
breach can lead to regulatory penalties, loss of licence to operate,
reputational damage, and client attrition.
Update
The Group has continued to develop its capabilities, recognising the continued
evolution of this risk. This risk remains unchanged from the prior year.
Key mitigating action
The Group has a range of data protection policies and processes in place and
has implemented robust controls to ensure that we are GDPR compliant. All
staff are fully aware of these policies, with awareness of key topics
reinforced with annual training and testing initiatives, e.g. phishing
awareness.
The Group has an Information Security Management System (ISMS) in place to
ensure that risks are identified and managed effectively. Additional assurance
is provided through the Cyber Essential Plus certification and by having
appropriate insurance policies in place. 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 and purple team testing.
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 co-ordinate and communicate with stakeholders in the
case of a significant incident.
Focus for FY 2026
Alongside the continuation of our existing key mitigating actions we will:
· Continue to enhance threat assessment to ensure controls are addressing
new and emerging threats.
Third-party or supplier disruption
Link to strategy Trend
Expand services Stable
Description
XPS is reliant on critical third parties and suppliers. These critical third
parties and suppliers are exposed to significant risks, such as cyber-attacks,
data breaches and operational disruption. If these risks materialise, this
could lead to XPS facing operational disruption, increased costs for
resolution efforts, regulatory penalties, reputational damage and loss of
clients.
Update
This risk remains unchanged from the prior year.
Key mitigating action
XPS operates a third-party management framework which ensures that all
suppliers meet the necessary requirements to protect the information assets
they may be given access to.
The Group has a formal selection process that ensures due diligence is carried
out before access is granted to client information. XPS uses a supplier
management platform to assist with managing its third-party suppliers and to
ensure they comply with the standards required by XPS and its clients. 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.
All third parties are reviewed prior to any access to information being
granted and at regular intervals during the life of the contract, with key
third parties being reviewed at least on an annual basis. We also regularly
monitor service delivery, general governance and financial status of all key
suppliers we contract with through ongoing performance review meetings.
Focus for FY 2026
Alongside the continuation of our existing key mitigating actions we will:
· Explore the use of AI technology to enhance and streamline the
procurement and third-party risk management process.
· Leverage the use of the due diligence platform to better understand the
information security, business and financial controls our suppliers have in
place.
· Enhance the information XPS provides to clients around its
information security controls through the implementation of a Trust portal.
Misappropriation of client funds
Link to strategy Trend
Regulatory change Stable
Description
XPS employees (across advisory, administration, SIP divisions) could collude
to commit large-scale fraudulent activities. This risk arises from factors
such as opportunity (e.g. weak controls or oversight), motivation (e.g.
financial difficulties), and rationalisation of fraudulent behaviour. Such
activities could result in significant financial loss, regulatory penalties,
loss of licence to operate, reputational damage, and client attrition.
Update
This risk remains unchanged from the prior year.
Key mitigating action
· Approval and signing matrix which sets out requirements and approval
processes for major transactions.
· Automated controls built into systems that mandate segregation of
duty.
· Bespoke training pathways to ensure that staff are appropriately
trained for their roles.
Focus for FY 2026
We will continue to monitor the effectiveness of existing key mitigating
actions.
Inaccurate internal financial information (budgeting & forecasts)
Link to strategy Trend
Expand services Stable
Growth market share
Merger and acquisitions
Description
The financial information (BS, P&L, cashflow - budgets and
forecasts) used to inform strategic decision making, investment decisions and
operational planning could be inaccurate. Significant inaccuracies could
result in poor strategic decision making, inefficient resource allocation and
overall financial performance.
Update
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.
Key mitigating action
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.
Focus for FY 2026
We will continue to monitor the effectiveness of existing key mitigating
actions.
Strategic opportunity or execution mismanagement
Link to strategy Trend
Expand services Stable
Growth market share
Merger and acquisitions
Description
There is a risk that XPS misses significant strategic opportunities or fails
to adapt to an evolving market. This could be driven by ineffective
identification or execution of strategic goals. This could result in reduced
market share, diminished competitive advantage, and erosion of shareholder
value.
Update
This risk remains unchanged from the prior year.
Key mitigating action
· Regular review and approval of projects from the Executive committee.
· Monthly forums for each key project that monitor work stream progresses,
key milestones, lessons learned, bottlenecks, financial planning and
budgeting, and action plans.
· Change management policy in place.
· Monthly executive committee meetings with strategy as a regular
agenda.
Focus for FY 2026
We will continue to monitor the effectiveness of existing key mitigating
actions.
Financial reporting risks
Link to strategy
Expand services Trend
Growth market share Stable
Merger and acquisitions
Description
This risk focus on the following risk areas in the financial reporting
process:
· General risk of error leading to a material financial
misstatement.
· Financial reporting fraud and management override of controls.
· Specific risk of judgemental error leading to material financial
misstatement, especially in areas requiring significant management judgement
and assumptions including alternative performance measures, valuation of
goodwill and intangibles, accounting for significant projects such as merger
and acquisitions, and the valuation of contract assets - accrued income within
the unbilled element of pensions, investment and administration services.
Update
This risk remains unchanged from the prior year.
Key mitigating action
· The Group's Executive Committee meets each month to discuss the
operational and financial performance of the business in an executive
committee meeting. Detailed financial performance reports are produced by
Finance supplemented by commentary from divisional/functional heads.
· Flash revenue and contribution results are reviewed on a figures
call each month ahead of the executive committee meeting. The figures call is
attended by the Co-CEO's, CFO, Group Financial Controller and the business
unit heads as well as other members of the Finance team. This drives a focused
agenda for the executive committee meeting.
· Monthly management accounts including detailed divisional financial
analysis are produced by Group Finance and tabled at each monthly executive
committee meeting.
· Monthly management accounts are submitted to the Board and discussed
at the appropriate Board meeting.
· The executive team presents on financial and operational performance at
all Board meetings. Divisional heads may also be invited to present where
required.
Focus for FY 2026
We will continue to monitor the effectiveness of existing key mitigating
actions.
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
18 June 2025
18 June 2025
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2025
Year ended 31 March 2025 Year ended 31 March 2024
Trading items Non-trading and exceptional items Total Trading items Non-trading and exceptional items Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Revenue 4 231,785 - 231,785 199,432 - 199,432
Other operating income - 988 988 - 92 92
Operating expenses (168,888) (19,703) (188,591) (149,960) (15,128) (165,088)
Gain on disposal - - - - 32,538 32,538
Profit/(loss) from operating activities 62,897 (18,715) 44,182 49,472 17,502 66,974
Finance income 5 109 - 109 50 - 50
Finance costs 5 (3,541) - (3,541) (4,543) - (4,543)
Profit/(loss) before tax 59,465 (18,715) 40,750 44,979 17,502 62,481
Income tax (expense)/credit 6 (14,353) 3,946 (10,407) (11,483) 3,169 (8,314)
Profit/(loss) after tax and total comprehensive income/(loss) for the year 45,112 (14,769) 30,343 33,496 20,671 54,167
Memo
EBITDA 69,676 (11,666) 58,010 55,295 24,536 79,831
Depreciation and amortisation (6,779) (7,049) (13,828) (5,823) (7,034) (12,857)
Profit/(loss) from operating activities 62,897 (18,715) 44,182 49,472 17,502 66,974
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 21.9 - 14.7 16.2 - 26.2
Diluted earnings per share 8 20.6 - 13.8 15.3 - 24.7
Consolidated Statement of Financial Position
for the year ended 31 March 2025
31 March 31 March
2025 2024
Note £'000 £'000
Assets
Non-current assets
Property, plant and equipment 5,278 3,976
Right-of-use assets 13,835 8,892
Intangible assets 222,998 208,070
Other long-term receivable 5,971 -
248,082 220,938
Current assets
Trade and other receivables 60,683 50,922
Cash and cash equivalents 14,717 10,005
75,400 60,927
Total assets 323,482 281,865
Liabilities
Non-current liabilities
Loans and borrowings 7 54,021 23,386
Lease liabilities 12,038 7,295
Provisions 2,903 1,802
Trade and other payables 670 -
Deferred tax liabilities 16,138 15,593
85,770 48,076
Current liabilities
Lease liabilities 2,915 1,872
Provisions 2,700 1,914
Trade and other payables 46,456 43,722
Current income tax liabilities 234 427
52,305 47,935
Total liabilities 138,075 96,011
Net assets 185,407 185,854
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 (15,142) (2,925)
Retained earnings 149,972 138,202
Total equity 185,407 185,854
Consolidated Statement of Changes in Equity
for the year ended 31 March 2025
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 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 vested share options - - - - (576) (576)
Shares purchased by Employee Benefit Trust for cash - - - (5,621) - (5,621)
Exercise of share options settled by the 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
Balance at 1 April 2024 104 1,786 48,687 (2,925) 138,202 185,854
Comprehensive income and total comprehensive income for the year - - - - 30,343 30,343
Contributions by and distributions to owners:
Dividends paid (note 9) - - - - (22,185) (22,185)
Dividend equivalents paid on vested share options - - - - (591) (591)
Shares purchased by Employee Benefit Trust for cash - - - (18,715) - (18,715)
Exercise of share options settled by the Employee Benefit Trust - - - 6,498 (5,630) 868
Share-based payment expense - IFRS 2 charge - - - - 5,946 5,946
Deferred tax movement in respect of share-based payment expense - - - - 2,366 2,366
Current tax movement in respect of share-based payment expense - - - - 1,521 1,521
Total contributions by and distributions to owners - - - (12,217) (18,573) (30,790)
Balance at 31 March 2025 104 1,786 48,687 (15,142) 149,972 185,407
Consolidated Statement of Cash Flows
for the year ended 31 March 2025
Note Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Cash flows from operating activities
Profit for the year 30,343 54,167
Adjustments for:
Depreciation 1,034 892
Depreciation of right-of-use assets 2,962 2,887
Amortisation 9,832 9,061
Finance income 5 (109) (50)
Finance costs 5 3,541 4,543
Gain on acquisition of business (988) -
Gain on sale of business - (34,639)
Loss on disposal of right-of-use assets - 117
Share-based payment expense 5,946 4,910
Other operating income - (92)
Income tax expense 6 10,407 8,314
62,968 50,110
Increase in trade and other receivables (13,509) (7,462)
Increase in trade and other payables 2,060 11,993
Increase/(decrease) in provisions 1,449 (379)
52,968 54,262
Income tax paid (11,152) (11,331)
Net cash inflow from operating activities 41,816 42,931
Cash flows from investing activities
Finance income received 5 109 50
Acquisition of subsidiary, net of cash acquired 3 (13,774) (405)
Purchases of property, plant and equipment (2,101) (1,851)
Purchases of intangibles (6,089) (5,655)
Disposal of business - 37,035
Net cash inflow/(outflow) from investing activities (21,855) 29,174
Cash flows from financing activities
Proceeds from loans net of capitalised costs 39,333 8,000
Repayment of loans (9,000) (52,000)
Payment relating to extension of loan facility (332) (200)
Exercise of share options settled from the EBT 868 27
Purchase of ordinary shares by EBT (18,715) (5,621)
Interest paid (2,312) (3,905)
Lease interest paid (318) (331)
Payment of lease liabilities (1,997) (2,754)
Dividends paid to the holders of the Parent (22,185) (18,025)
Dividend equivalents paid on vesting of share options (591) (576)
Net cash outflow from financing activities (15,249) (75,385)
Net increase in cash and cash equivalents 4,712 (3,280)
Cash and cash equivalents at start of year 10,005 13,285
Cash and cash equivalents at end of year 14,717 10,005
Selected notes to the Consolidated Financial Statements
for the year ended 31 March 2025
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 2025 or 31 March
2024. Statutory accounts for the year ended 31 March 2025, which were
approved by the directors on 18 June 2025, and 31 March 2024 have been
reported on by the Independent Auditors. The Independent Auditor's report on
the Annual Report and Accounts for years ended 31 March 2025 and 31 March 2024
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 2025 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 2024 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 2024. New standards,
amendments, and interpretations to existing standards effective for the first
time for periods beginning on (or after) 1 April 2024, 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 2025 Year ended 31 March 2024
Total before tax Tax on adjusting items (8) Adjusting items after taxation Total before tax Tax on adjusting items (8) Adjusting items after taxation
£'000 £'000 £'000 £'000 £'000 £'000
Corporate transaction costs (1) (1,810) - (1,810) - - -
Acquisition-related remuneration (2) (2,080) - (2,080) (1,718) (212) (1,930)
Gain on purchase (3) 988 - 988 - - -
Exceptional items (2,902) - (2,902) (1,718) (212) (1,930)
Share-based payment costs (4) (8,764) 2,184 (6,580) (6,376) 1,623 (4,753)
Amortisation of acquired intangibles (5) (7,049) 1,762 (5,287) (7,034) 1,758 (5,276)
Gain on disposal (6) - - - 32,538 - 32,538
Contingent consideration write back (7) - - - 92 - 92
Non-trading items (15,813) 3,946 (11,867) 19,220 3,381 22,601
Total (18,715) 3,946 (14,769) 17,502 3,169 20,671
(1) The Group incurred total corporate transaction costs of £1,810,000 (2024:
£nil) in the year, which relates to deal fees associated with the Polaris
acquisition. These amounts are material in size and one-off in nature. As
such, in line with the Group's accounting policies, they have been classified
as exceptional items. 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) Acquisition-related remuneration of £919,000 (2024: £nil) relates to the
acquisition of Polaris, and contingent amounts owed to the vendor as
acquisition-related remuneration in respect of the acquisition of Penfida
Limited totalling £1,161,000 (2024: £1,718,000). For both the Polaris and
the Penfida acquisitions, as continued employment is one condition of the
share purchase agreements, then in accordance with IFRS 3, the entire
additional amount must be treated as a post-transaction employment cost
accruing over the deferment period (to March 2028 for Polaris, and to
September 2024 for Penfida). These additional amounts are material in size and
one-off in nature. As such, in line with the Group's accounting policies and
the treatment adopted in prior periods, they have been classified as
exceptional items. The entire Penfida contingent acquisition-related
remuneration of £3,500,000 was paid in October 2024. 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.
(3) A gain on purchase of Polaris Actuaries and Consultants Limited was
recognised in the year. Due to the criteria set out in IFRS 3 that determine
consideration that includes a continuing employment clause to be treated as
post-acquisition remuneration, only £13.8 million of the total purchase price
can be recognised as such. After a purchase price allocation exercise
allocated amounts to intangible assets and related deferred tax, the Group is
left with a gain on purchase, which is presented as other operating income.
This item is exceptional by nature, as management does not consider this gain
to reflect the performance of the Group in the year, and so it is presented as
an exceptional item.
(4) Share-based payment expenses and related National Insurance 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 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.
(5) During the year the Group incurred £7,049,000 of amortisation charges in
relation to acquired intangible assets (customer relationships and brand)
(2024: £7,034,000). As this figure is material, and is linked to non-trading
activity, management excludes 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.
(6) The gain on disposal in the prior year relates to the NPT business
disposal. This is a material figure which does not reflect the underlying
performance of the Group and is non-recurring.
(7) The contingent consideration write back in the prior year 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 does not include this
figure in income when reviewing overall business performance. There are no
further payments to be made in respect of this acquisition.
(8) The tax credit on exceptional and non-trading items of £3,946,000 (2024:
£3,169,000) represents 21% (2024: 18%) of the exceptional and non-trading
items incurred of £18,715,000 (2024: £17,502,000). This is different to the
expected tax credit of 25% (2024: charge of 25%), as various adjustments are
made to tax including for deferred tax, and the exclusion of amounts not
allowable for tax.
3 Business combinations during the period
On 28 February 2025, the Group acquired 100% of the share capital of Polaris
Actuaries and Consultants Limited ("Polaris") from the shareholders of Polaris
Actuaries and Consultants Limited for £23.0 million cash upon completion (of
which £9.2 million is subject to certain rights of claw-back) and a further
payment of up to £35.0 million which is payable after three years, contingent
on achieving certain stretching business performance criteria. Due to the
requirements of IFRS 3 which result in all consideration with an employment
service condition being treated as a post-acquisition remuneration expense,
the £9.2 million cash paid on completion, as well as the earn-out accrual,
will be treated as post-acquisition remuneration and will be an expense to the
Group over the three-year period to 28 February 2028. This expense will be
treated as an exceptional cost, as it meets the Group's definition of an
exceptional item (see note 2).
Polaris was established in 2015 with the strategy to provide insurance clients
with high-quality actuarial and technical services, supporting them on complex
financial, risk and regulatory projects. Today, Polaris is at the forefront of
its field, providing a range of services from large-scale, multi-disciplined
transformation programmes to specialist project support for some of the UK's
largest insurance companies.
Details of the fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill are as follows:
Book value Adjustment Fair value
£'000 £'000 £'000
Trade and other receivables 2,223 - 2,223
Cash 32 - 32
Trade and other payables (957) - (957)
Corporation tax payable (351) - (351)
Customer relationships - 18,500 18,500
Deferred tax (1) (4,625) (4,626)
Total net assets 946 13,875 14,821
The fair value and the gross value of acquired receivables are the same. The
receivables have been reviewed and it is expected that all contractual cash
flows will be collected.
Fair value of consideration paid
£'000
Cash (excluding amount with rights of claw-back which are not treated as 13,806
consideration under IFRS 3)
Accrued additional consideration 27
Total consideration 13,833
Gain on acquisition (988)
Due to the restrictions under IFRS 3 on recognising consideration with a
continuing employment clause as consideration, a gain on acquisition has
arisen, instead of having an element of goodwill in the balance sheet. This
gain on acquisition has been presented as other operating income and is shown
as a non-trading item, as it does not represent the performance of the Group
and is one-off in nature.
Since the acquisition date, Polaris has contributed £1.2 million to Group
revenues and £0.4 million to Group profit before tax, before taking into
account the post-acquisition remuneration referred to above. Including this
figure, Polaris has contributed a loss of £0.6 million since the acquisition
date.
If the acquisition had occurred on 1 April 2024, Group revenue would have been
£247.4 million and Group profit before tax would have been £45.9 million,
excluding the impact of the post-acquisition remuneration disclosed above.
Including this, and assuming the transaction had taken place on 1 April, Group
profit before tax would have been £45.0 million.
Acquisition expenses
Costs relating to this acquisition (excluding the post-acquisition
remuneration) totalled £1,810,000 and are included within exceptional costs
as corporate transaction costs.
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:
consulting and administration services to UK pension schemes and insurance
companies. 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
2025 2024
£'000 £'000
Actuarial & Consulting 106,108 93,411
Administration 93,654 71,929
Investment Consulting 19,443 20,316
SIP (1) 12,580 11,017
National Pension Trust ("NPT") (2) - 2,759
Total 231,785 199,432
1 Self Invested Pensions (SIP) business, incorporating both SIPP and SSAS
products.
2 NPT business was sold on 20th November 2023 and so revenue in the year is up
to that date.
5 Finance income and expense
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Interest income on bank deposits 109 50
Finance income 109 50
Interest expense on bank loans 2,410 3,629
Other costs of borrowing 384 542
Interest on leases 634 323
Other finance expense 113 49
Finance expenses 3,541 4,543
6 Income tax expense
Recognised in the statement of comprehensive income
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Current tax expense
Current year 13,275 10,133
Adjustment in respect of prior year (1,154) (131)
Total current tax expense 12,121 10,002
Deferred tax (credit)/expense
Origination and reversal of temporary differences (2,234) (2,231)
Adjustment in respect of prior year 520 543
Total income tax expense 10,407 8,314
Year ended Year ended
31 March 31 March
2025 2024
£'000 £'000
Profit for the year 30,343 54,167
Total tax expense 10,407 8,314
Profit before income tax 40,750 62,481
Tax using the UK corporation tax rate of 25% (2024: 25%) 10,188 15,620
Non-deductible expenses 1,189 510
Other operating income not taxable (247) (23)
Gain on disposal not taxable - (8,135)
Fixed asset permanent differences (89) (70)
Adjustment in respect of prior periods (634) 412
Total tax expense 10,407 8,314
The standard rate of corporation tax in the UK was 25% (2024: 25%). The
average effective tax rate was 26% (2024: 13%). The average effective rate in
the prior year is impacted by the non-taxable gain on sale of the NPT
business. Excluding this, the effective tax rate in the prior year 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
2025, which is 25% (2024: 25%). Deferred tax not recognised relates to £6.7
million (2024: £6.7 million) of finance expense losses in a prior year and
their future recoverability is uncertain. At 31 March 2025 the total
unrecognised deferred tax asset in respect of these losses was approximately
£1.7 million (2024: £1.7 million).
£1,521,000 (2024: £521,000) of current year tax, and £2,366,000 (2024:
£1,167,000) 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 2025
Drawn revolving credit facility - - 55,000 55,000 55,000
Capitalised debt arrangement fees - - (979) (979) (979)
Total - - 54,021 54,021 54,021
31 March 2024 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 - - 24,000 24,000 24,000
Capitalised debt arrangement fees - - (614) (614) (614)
Sub-total - - 23,386 23,386 23,386
The book value and fair value of loans and borrowings are not materially
different.
Terms and debt repayment schedule
Amount Year of
31 March 2025 £'000 Currency Nominal interest rate maturity
revolving credit facility 55,000 GBP 1.20% above SONIA 2029
Amount Nominal interest Year of
31 March 2024 £'000 Currency rate maturity
revolving credit facility 24,000 GBP 1.25% above SONIA 2026
At 31 March 2025 the Group had drawn down £55,000,000 (2024: £24,000,000) of
its £120,000,000 (2024: £100,000,000) revolving credit facility. The Group's
revolving facility agreement is for £120 million with an accordion of £50
million. This facility had a four-year term which started in March 2025. This
facility replaces the Group's previous facility which was due to expire in
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
Limited, XPS Pensions Consulting Limited, XPS SIPP Services Limited, XPS
Holdings Limited, XPS Pensions Limited, XPS Investment Limited, XPS
Administration Limited, and Polaris Actuaries and Consultants 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
2025 2024
£'000 £'000
Profit for the year 30,343 54,167
'000 '000
Weighted average number of ordinary shares in issue 206,453 206,760
Diluted weighted average number of ordinary shares 219,437 219,621
Basic earnings per share (pence) 14.7 26.2
Diluted earnings per share (pence) 13.8 24.7
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.
The decrease compared to the prior year is largely due to the large gain on
disposal in the year to 31 March 2024.
Reconciliation of weighted average ordinary shares in issue to diluted
weighted average ordinary shares:
Year ended Year ended
31 March 31 March
2025 2024
'000 '000
Weighted average number of ordinary shares in issue 206,453 206,760
Dilutive impact of share options vested up to exercise date 792 940
Dilutive impact of PSP and SEP options not yet vested 8,334 9,226
Dilutive impact of dividend yield shares for PSP and SEP options 1,125 1,246
Dilutive impact of SAYE options not yet vested 2,733 1,449
Diluted weighted average number of ordinary shares 219,437 219,621
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 vests three 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 2023 and 2025; these will vest
in the years ending 31 March 2026 and 2028 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
2025 2024
£'000 £'000
Adjusted profit after tax 45,112 33,496
Adjusted earnings per share (pence) 21.9 16.2
Diluted adjusted earnings per share (pence) 20.6 15.3
9 Dividends
Amounts recognised as distributions to equity holders of the Parent in the
year
31 March 31 March
2025 2024
£'000 £'000
Final dividend for the year ended 31 March 2024: 7.0p per share (2023: 5.7p 14,577 11,825
per share)
Interim dividend for the year ended 31 March 2025: 3.7p (2024: 3.0p) per 7,608 6,200
ordinary share was paid during the year
22,185 18,025
The recommended final dividend payable in respect of the year ended 31 March
2025 is £17.0 million or 8.2p per share (2024: £14.6 million or 7.0p per
share).
The proposed dividend has not been accrued as a liability as at 31 March 2025
as it is subject to approval at the Annual General Meeting.
31 March 31 March
2025 2024
£'000 £'000
Proposed final dividend for year ended 31 March 2025 16,961 14,630
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 £183,236,000. Therefore, there are sufficient distributable
reserves in XPS Pensions Group plc in order to pay the proposed final
dividend.
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