XPS Pensions Group reports year of strong growth

XPS Pensions Group reported a 21% increase in group revenue in its final results on Thursday, to £196.6m.

The London-listed firm said the growth was supported by significant demand across all business segments and inflationary fee adjustments.

Operational gearing also improved, with adjusted EBITDA rising 32% year-on-year and margins expanding to 27.9% from 25.5%.

The Pensions actuarial consulting division saw 21% revenue growth, while pensions investment consulting grew 13%, both fuelled by market and regulatory changes.

Its pensions administration segment experienced a 25% increase in revenue due to new client acquisitions, fee increases, and project work in areas such as GMP and the McCloud remedy.

The self-invested pensions (SIP) business recorded a 17% revenue rise, supported by robust sales and increased commissions tracking the bank base rate.

In November last year, XPS sold the National Pension Trust (NPT) to SEI for an initial cash consideration of £35m.

At the same time, XPS entered into a long-term service contract with SEI.

The group's strong balance sheet and cash-generative platform resulted in an operating cash-flow conversion rate of 104%, up from 99% in the 2023 financial year.

Net debt-to-adjusted EBITDA was substantially reduced to 0.27x by the end of March, compared to 1.38x a year earlier.

Statutory profit before tax surged by 227% year-on-year, and even excluding the impact of the NPT disposal, the profit increased 57%.

Adjusted diluted earnings per share rose 24% to 15.1p, despite an increase in the corporation tax rate from 19% to 25%.

The board proposed a final dividend of 7p, bringing the total dividends for the year to 10p, a 19% year-on-year increase.

“We have seen continued growth in areas that we have invested in, such as our risk transfer team, and in services that we provide directly to insurers,” said co-chief executive officer Paul Cuff.

“We have also enjoyed playing an active role in the debate about the future of our industry in the new age of better funded defined benefit schemes; we look forward to continuing to advise our clients on the full range of strategic options available to them against the backdrop of changing regulations that are coming their way.”

Cuff noted the announcement earlier in June that XPS would be joining the FTSE 250.

“It is a very proud milestone for us, achieved through the hard work of our colleagues and the support of our clients and shareholders.

“There is much yet to come and we remain very excited about the next stage of our journey.”

At 1201 BST, shares in XPS Pensions Group were up 7.68% at 291p.

Reporting by Josh White for Sharecast.com.