XPS Pensions confident after first-half growth

The FTSE 250 company said growth was driven by strong client demand, project expansion, and inflation-linked fee increases, alongside significant progress in operational efficiency.

Adjusted EBITDA climbed 37% over the six months ended 30 September, to £30.9m, while profit before tax surged 55% to £26.5m.

Earnings per share increased 52% to 9.4p, and the interim dividend was raised by 23% to 3.7p per share.

The board said the advisory and administration divisions, which contribute 95% of group revenue, continued their trend of year-on-year growth.

Actuarial and consulting revenues rose 17%, supported entirely by organic growth, while administration revenue saw a 40% increase, driven by high levels of project work, particularly in the public sector.

Investment consulting revenues normalised after two years of rapid growth, declining slightly by 2%, while SIP revenues rose 12%, benefiting from higher sales volumes and bank commissions.

XPS highlighted the benefits of its business model, emphasising predictable and recurring revenue streams, operational leverage, and continued investment in client services.

The firm said it had successfully transitioned clients to its proprietary Aurora administration platform, which was expected to enhance future efficiencies.

The group's net debt fell sharply to £22.4m, compared to £68.2m a year earlier, aided by the sale of the National Pension Trust in November last year.

XPS also noted several strategic milestones, including joining the FTSE 250, bolstering its industry profile among larger pension schemes and employers.

It also achieved multiple industry awards, and continued to focus on sustainability, remaining carbon neutral for the fourth consecutive year and retaining its status as a signatory to the FRC's Stewardship Code.

Looking ahead, XPS said it was confident in meeting recently upgraded full-year expectations.

Regulatory changes were expected to sustain demand within the advisory segment, while growth opportunities in administration remained robust across private and public sectors.

“We are very pleased with the first half performance of the group,” said co-chief executive officer Paul Cuff.

“We have seen strong, profitable growth alongside further operational leverage as we have responded to high client demand, including in areas that we have invested in over recent years such as our risk transfer advisory capability and in public sector administration.

“We have achieved many milestones, including the ongoing roll out of our proprietary new administration system, Aurora, and investing in our people, including making senior hires to drive future growth as we continue to broaden our advisory capabilities in an evolving pensions and insurance market.”

Cuff said gaining entry into the FTSE 250 in the summer was a “big milestone” for the company.

“We are really excited about the future and are continuing to build on the positive momentum we have.”

At 0859 GMT, shares in XPS Pensions Group were down 1.95% at 351p.

Reporting by Josh White for Sharecast.com.