Paul Cuff: There was double digit growth in every one of our core divisions - actuarial, investment consulting, administration, and our SIP business.
XPS Pensions Group has unveiled its final results for the year ended 31 March – revealing a 20% increase in revenue and a 227% rise in pre-tax profits.
The pension consulting and administration firm said reported revenues had increased from £166.6m in the year to 31 March 2023 to £196.6m in the year to the end of March this year – with pre-tax profits increasing from £19.1m to £62.5m over the same period.
The results are in line with expectations set out in the firm's post-close trading update, published in April, and a result of strong growth across all its main lines of business including pensions actuarial consulting, investment consulting and administration.
Source: XPS Pensions Group. Notes: (1) Adjusted measures exclude the impact of acquisition related amortisation, share based payments, exceptional costs and the fair value adjustment to contingent consideration. They also exclude the results of the NPT business which was sold in November 2023. (2) Statutory/as reported profit before tax includes the gain on disposal of the NPT business. The net gain on the disposal of the NPT business during the year was £32.5m.
The firm said pensions actuarial consulting grew 21% and pensions investment consulting grew 13% driven by strong client demand due to continued market and regulatory changes, alongside inflationary fee increases.
It said pensions administration revenue grew 25% year-on-year – driven by new client wins, inflationary fee increases and increased levels of project work in areas such as GMP equalisation and the McCloud remedy.
XPS said these results marked the seventh consecutive year of revenue growth since its listing in 2017 – noting its performance underscored the non-cyclical, predictable and resilient nature of the business with an established brand, and the benefits of investments made in services in prior years.
It said it had continued success in the first-time administration outsourcing market, with the landmark appointment to the John Lewis Partnership pension scheme – adding its proprietary administration platform Aurora "delivered on time and on budget" with its first new large client onboarded.
XPS Pensions Group co-chief executive Paul Cuff said: "We are delighted to announce another year of record growth, encompassing multiple financial upgrades during the period. Our prior year was strong too, so to carry on our positive momentum and achieve total group revenue growth of 21% is really pleasing. It is also great that this was achieved with double digit growth in every one of our core divisions - actuarial, investment consulting, administration, and our SIP business.
"We have seen continued growth in areas that we have invested in, such as our risk transfer team, and in services that we provide directly to insurers. We have also enjoyed playing an active role in the debate about the future of our industry in the new age of better funded defined benefit schemes; we look forward to continuing to advise our clients on the full range of strategic options available to them against the backdrop of changing regulations that are coming their way.
"Earlier this month, we were delighted to learn that XPS will be joining the FTSE 250. It is a very proud milestone for us, achieved through the hard work of our colleagues and the support of our clients and shareholders. There is much yet to come and we remain very excited about the next stage of our journey."
Co-chief executive Ben Bramhall added: "The delivery of our new administration platform, Aurora, was a big milestone for our pensions administration business. It was delivered on time and on budget and is now live, and we continue to invest in the platform and to transition clients on to it. We are excited as Aurora is truly cutting edge and will deliver a better experience for our clients and their members, and it has already been instrumental in new business success."
He added: "We remain a truly employee-centric organisation and were very proud of our employee survey results in the year, where for the second year in a row we achieved an employee net promotor score of over +30. We also won a UK Company Culture Award for the best diversity, equality and inclusion initiative.
"Our culture is set by everyone at our firm, and we would like to thank all of our people for the way they look after each other and our clients. We are proud of what everyone has achieved in what has been a brilliant year for XPS."
Outlook
XPS said the regulatory and market drivers behind its business model remain "in place" – noting the scale and reputation it has built in its markets, the thought leadership it provides on regulatory issues and the proprietary technologies and solutions it has developed, position it well to capitalise on the long-term opportunities in front of the firm.
It said it has seen continued strong demand of its services since the beginning of the year and maintained an active new business pipeline – noting it has continued to grow market share, but with this still under 10% adding that there was "considerable scope" for the business to grow further.
The firm added that the increasing overlap between the pensions and insurance industries through bulk annuities as well as broader life insurance opportunities offered further meaningful avenues of growth – noting that, to better reflect the growing overlap between the pensions and insurance industries and the expanding opportunity set ahead of the firm, it is making a change to its brand identity to trade as XPS Group, rather than XPS Pensions Group, noting its legal registered name would not, however, change.
