XPS announces half year results

XPS announces half year results

25 Nov 2021

Unaudited interim results for the half year ended 30 September 2021

• High levels of client activity and new business wins drove 10% organic growth in Group revenues to £67.3 million
• Advisory revenue growth of 10% comprised:
     - Fourth consecutive half year of YoY growth in Pensions Actuarial and Consulting revenues (+7% YoY)
     - Continued strong double digit growth in Investment Consulting revenues (+26% YoY)
• Pensions Administration revenue growth of 9% YoY driven by new client wins coming on stream and project work
• SIP revenues down 3% YoY as expected due to the bank base rate reductions but underlying SIP sales have grown
• NPT assets under management (AUM) up 49% YoY to c.£1.2 billion and combined with recovery in asset prices driving 50% YoY increase in revenues
• Investment in headcount and increases in certain central costs mean adjusted EBITDA of £15.5 million is up 5% YoY
• Statutory profit before tax of £7.1m is up 154%, reflecting both the revenue growth as well as an exceptional credit and lower non-trading items during the period (£4.9 million; 2020: £8.5 million)
• Net debt/adjusted EBITDA of 1.87x as at 30 September 2021 (2020: 1.78x)
• New RCF of £100 million on a four-year term in place to support growth
• Interim dividend of 2.4 pence (2020: 2.3 pence) per share declared by the Board up 4% YoY

Operational highlights:

• Strong revenue growth, driven by high client demand due to the combination of favourable regulatory backdrop and GMP equalisation projects starting to progress
• ‘New logo’ wins across all business lines including winning large new clients to provide specialist GMP equalisation support
• Landmark new win in corporate advisory sector during October 2021, appointed to advise BT Group plc
• Strong brand, enhanced by industry awards - ‘Pensions Actuarial Consulting Firm of the Year’ and ‘Investment Consulting Firm of the Year’
• New business pipeline has now fully recovered with ‘Market Force’ initiative continuing to create opportunities – both our industry awards and high-profile wins have created a strong tailwind for the group
• Additional resource brought on board to meet high client demand and deliver growth, with continued investment to capitalise on client opportunities
• Strong focus on ESG within the business continued, notable milestones achieved:
      - Became signatory to the FRC’s Stewardship Code in the period
      - Achieved full carbon neutrality (Scope 1, 2 and 3 emissions) in November 2021

Outlook

We are pleased with our results for the first half, and we anticipate that full year results will be in-line with the Board’s expectations. We anticipate that the current high levels of client activity will continue, and we are delighted that not only has our new business pipeline returned to pre-pandemic levels but that we are also winning high profile clients. We remain confident of the medium and longer term opportunities for the group.

Paul Cuff, Co-CEO of XPS Pensions Group, commented:
“We are pleased with the performance of the Group in the first half of the year. We kept innovating and developing our solutions, to assist clients against a backdrop of regulatory change in wide ranging areas. Client activity levels were high, and this combined with bringing some new client wins on board contributed to strong growth in Group revenues, all of which was organic. As the half year progressed, we saw our new business pipeline strengthen and the level of new business activity has now fully recovered. We are delighted to have won a number of new clients over the period, and the partnership agreement we recently signed with BT Group plc on its pensions strategy is very exciting. Credentials like this, when combined with the industry awards we have recently won, make us optimistic about our ability to continue to win new clients. At XPS, ESG is high on our agenda. We have a sustainable business model, in which we play an important societal role in supporting the provision of long-term financial security for millions of people. We are proud to announce that we have further demonstrated our commitment to the ESG agenda by becoming a net carbon neutral business with immediate effect – offsetting our Scope 1, 2 and 3 emissions. Whilst this has been achieved largely through supporting UN approved renewable energy projects, we are actively implementing practical ways in which we permanently reduce our overall carbon footprint. We remain very excited about the role we play in supporting our clients and future opportunities which lie ahead. Our people are at the heart of our business and we would like to thank all of our employees for the excellent ways in which they continue to support our clients and each other.”

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